Consumer confidence rises but stays gloomy - GfK
By Sean Farrell
Date: Friday 19 Feb 2021
(Sharecast News) - UK consumer sentiment strengthened but stayed gloomy with the economy in lockdown and the outlook uncertain, a survey showed.
GfK's Consumer Confidence Index rose five points to -23 in February from the month before as households grew more optimistic about the economy and their own finances over the next 12 months.
The overall reading was still in deeply negative territory and was far worse than a reading of -7 a year earlier when the Covid-19 crisis was emerging. All GfK's key measures were significantly gloomier than February 2020.
After deteriorating in January, consumers' outlook for the economy improved to -30 from -44. Households' view of their own finances over the next year improved to +4 from +2.
People's view of the economy and personal finances over the past 12 months remained largely unchanged but the more optimistic outlook made households more likely to make a major purchase with that score improving to -19 from -24.
With the chancellor's budget due on 3 March the UK's economy is in a precarious state. Covid-19 vaccines promise a return to more normal activity in 2021 but the government is cautious about moving too quickly.
Economists are also urging Rishi Sunak to maintain support for jobs to stop the economy going into a tailspin. Sunak's furlough programme is due to end on 30 April and he is also under pressure to extend a benefits increase for the worst off.
Joe Staton, GfK's client strategy director, said the survey appeared encouraging but that the uptick could be temporary with further tough times ahead.
He said: "We need to be cautious because the positive tailwinds of the vaccination roll-out are being met by the very strong headwinds of unemployment, the threat of inflation and the difficulty that many face in affording day-to-day living costs - all serious issues that can dampen consumer confidence."
Many people have saved money during Covid-19 restrictions and some analysts, including Bank of England Chief Economist Andy Haldane, have predicted a consumer boom once the economy reopens. But many families and businesses are struggling with reduced incomes and face the prospect of job losses and higher debts when government support ends.
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