In the United Kingdom, the consumer confidence survey measures the level of optimism that consumers have about the performance of the economy in the next 12 months.
The GfK Consumer Confidence is derived from the survey of about 2,000 consumers which are asked to rate the relative level of past and future economic conditions including personal financial situation, climate for major purchases, overall economic situation and savings level.
As can be seen in the graph above the figure released for April reached a new low. Rising inflation, the war in Ukraine and the fuel price increases have created a negative storm of concern on personal financial security.
The graph below shows the figure to be the lowest level of consumer confidence for the past 10 years, the closest negative figure was immediately after the covid pandemic caused global lockdowns.
The last time that the records showed a figure this low was back in 2008 when we had the global economic crash.
The burning questions are: "How long will this last?" and "How quickly can it recover?"
Joe Staton, client strategy director at GfK was quoted as saying: “There’s clear evidence that Brits are thinking twice about shopping. With little prospect of any economic relief on the horizon, we can only forecast further falls in the index.”
Not encouraging to read, we know that inflation is rising and that increases in interest rates will follow, consumers will face further gas and electricity bill increases in October and the situation in Ukraine is not likely to be resolved soon.
Drops in consumer confidence at this scale lead to less spending, less investment and will very likely lead to recession
The Guardian reported: "The economy is expected to contract by 0.25% in 2023 and remain weak in the next two years."
With gloomy news like this businesses need to look at their business plans and take action now to ensure that they are as strong as possible to help weather the potentially difficult times ahead.