UK consumer confidence falls

• Second quarter saw Welsh consumer confidence rise 5 percentage points from Q1 to -14%, compared to the UK which climbed one percentage point, to -17% from a record low;
• Sentiment around state of the economy fell a further 18 percentage points from the previous quarter, to -80%, compared to -88% nationally.
• However, lockdown had some positives with sentiment around level of debt, disposable household income and job security all improving in Wales from last quarter; and
• Welsh consumers hint at Q3 bounceback with net intent to spend rising quarter-on-quarter across all discretionary categories. 
• The Deloitte Consumer Tracker measures UK consumer confidence on a quarterly basis.

UK Consumers emerge from Q2 in a cautious but slightly more positive mood, following a record decline in consumer confidence in the first quarter of the year, according to the latest Deloitte Consumer Tracker. Despite significant caution on the state of the economy, and continued concerns about job security and career progression, consumers intend to start spending again in the quarter ahead, albeit below year-on-year comparables.

Deloitte’s analysis is based on responses of more than 3,000 UK consumers between 19th and 23rd June 2020, as some of the UK’s lockdown measures were lifted and non-essential shops reopened, albeit at the very end of that period in Wales.

Limited spending opportunities over lockdown saw many consumers use the period to boost individual savings. At the same time, government-backed furloughing protected a large proportion of individual earnings during lockdown and, subsequently, consumer pockets. In Wales, quarter-on-quarter confidence around levels of debt rose 13 percentage points, to 3%, with household disposable income sentiment seeing a 30 percentage point increase to -5%, which is 7 percentage points higher than this time last year. However, while year-on-year sentiment around job security was up 4 points (to -18%), job opportunities and career progression sentiment was down 13 points (to -24%), so caution remains.

Consumers seek a taste of normality
The Tracker revealed that, having stayed home for most of Q2, Welsh consumers are eager to start spending again in the leisure sector over the coming quarter. Consumer net spending intent for Q3 is highest in the restaurant and going out categories, up quarter-on-quarter by +61 and +47 percentage points, respectively. Whilst 27% of consumers indicate they would visit pubs and coffee shops within a month of reopening, the figure is lower for restaurants (14%) suggesting recovery may come later in Q3 and beyond.

Ian Howse, Senior Partner for Wales at Deloitte, said: “The leisure sector was among the first to be impacted by the COVID-19 pandemic, as opportunities to travel and spend on out-of-home activities were limited. Social distancing may slow recovery but, after many months at home, the jump in consumers wanting to drink out again suggests many are seeking a taste of ‘normality’. Whilst restaurant returns may be slower, many in the leisure sector will be encouraged by incoming government initiatives that should help the industry rebound in the short-term.”

Welsh consumers indicate a slower recovery in the travel industry as intended spending on holidays and hotel stays, whilst up +35 percentage points from Q1, remains in negative territory (at -5%) which is lower than the national outlook of -3%.

Howse continued: “With the possibility of an economic downturn and a second wave of the virus, consumers will probably remain cautious about their discretionary spending as they wait and watch.”

Ends

Note to editors

About the research
The Deloitte Consumer Tracker is based on a consumer survey carried out by independent market research agency, YouGov, on Deloitte’s behalf. This survey was conducted online with a nationally representative sample of more than 3,000 consumers in the UK aged 18+ between 19th and 23rd June 2020. Overall consumer confidence is calculated as an aggregate of six individual measures: job security, job opportunities, household disposable income, level of debt, children’s education and welfare, general health and wellbeing. Respondents have been asked their view on the state of the UK economy from Q1 2020.

About Deloitte
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Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

The information contained in this press release is correct at the time of going to press.

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