UK consumer confidence slides in February, GfK reveals

GfK said its consumer sentiment index dropped to 0 in February from 4 in January, worse than the reading of 3 expected by analysts.

"Despite the positive impact of continued low interest rates and subdued inflation on our day-to-day household budgets, the feeble outlook for growth and a variety of economic uncertainties since the start of the year has depressed our New Year optimism," Joe Staton, head of market dynamics at GfK, said.

The survey comes a day after the Office for National Statistics revealed that UK economic growth was driven by consumer spending in the fourth quarter. The final estimates of fourth quarter UK gross domestic product were left unchanged at 1.9% year-on-year growth and 0.5% quarter-on-quarter growth. The GDP came in as expected by economists and compared to the third quarter’s increases of 2% annualised and 0.4% on the quarter.

Bank of England Governor Mark Carney has said the central bank has been waiting for a pick-up in the economy and wage growth before raising interest rates.

Meanwhile, some analysts believe fears over the consequences of Britain possibly leaving the European Union following the 23 June referendum will weigh on consumer sentiment.

“February’s marked relapse in consumer confidence is obviously worrying, and a concern is that sentiment will slide further over the next few months as uncertainty over the outlook intensifies ahead of the 23 June referendum on UK membership of the European Union,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“This could well cause consumers to be more cautious in their spending and weigh down on growth.”