UK consumer confidence remains negative in January, GfK reveals

UK consumer confidence improved in January but was still in negative territory on worries about Brexit and a weaker pound, according to a widely followed survey on Tuesday.

GfK’s consumer confidence index increased two points to -5 this month, beating expectations of -7.

"Despite strong GDP and record FTSE highs, the combination of Brexit jitters, Blue Monday, and a wobbly pound pushing up prices contributed to keeping UK consumer confidence negative at -5 this month,” said Joe Staton, head of market dynamics at GfK.

The marginal rise in consumer confidence was driven by more positive views on personal finances. The index measuring the personal finance situation over the past 12 months to January rose three points to +3 while the index measuring consumers’ outlook for personal finances over the next year rose four points to +7.

However, consumers were less optimistic about the wider economy. The measure for the general economic situation in the UK during the past 12 months remained negative at -24 in January, a two-point increase. Expectations on the general economic situation for the next 12 months remained at -23 this month.

As a result, the overall index score remained negative at -5 in January, a two point increase.

Looking ahead, rising inflation and weak wage growth is expected to squeeze households’ disposable income throughout 2017, Staton said.

Barclays Research analysts said despite the marginal increase in January, the headline consumer confidence index is one point below its one-year average.

“Further, the slight positivity seen in January is likely to be short-lived. Given the survey was carried out during the first two weeks of January, it does not account for Prime Minister Theresa May’s speech on 17 January where she clarified that the UK would exit both the EEA and the EU customs union.

“Equally, it does not account for inauguration of Donald Trump as US President and his subsequent executive orders, some of which have proved controversial. It is likely that these events, which will only be factored into February’s survey responses, will weigh heavily on confidence with regard to personal finances and the wider economy, thus pushing the headline index back down.”

The bank added that inflation expectations are at historical highs and households are conscious about price rises ahead.