Brexit fears send British consumer confidence to 6-year low

Demonstrators against Brexit gather outside Parliament in London, on Sept 3, 2019.
Demonstrators against Brexit gather outside Parliament in London, on Sept 3, 2019.PHOTO: NYTIMES

LONDON • British consumer confidence hit a six-year low this month, as the prospect of a no-deal Brexit raised households' worries about their finances.

GfK's headline consumer confidence index is at its lowest since Britain almost slid into recession in 2013. The drop was led by pessimism about the economy and future personal finances.

Meanwhile, Nationwide Building Society said house-price growth remained unchanged on the month and rose 0.6 per cent from a year earlier. That is a ninth straight month of sub-1 per cent increases.

But lending data suggests there is still quite solid demand for property. The Bank of England (BOE) said mortgage approvals jumped to the highest in two years in July.

"The UK Nationwide house price index crept up in August... though this was more to do with favourable base effects rather than underlying demand," said Bloomberg economist Niraj Shah.

Last Friday, Lloyds Bank said business optimism crashed in August to the lowest since 2011, and BOE data showed consumer credit growth in July matched the weakest figures in five years.

The UK posted its first quarterly contraction since 2012 in the second quarter.

 
 
 
 

Sterling slumped below US$1.20 yesterday to a three-year low as Prime Minister Boris Johnson's implicit ultimatum to lawmakers to back him on Brexit or face an election sent investors scrambling to dump British assets.

The pound, which has now lost 20 per cent of its value since Britain voted to leave the European Union in 2016, fell to as low as US$1.1959, down nearly 1 per cent on the day. Barring an October 2016 flash crash when sterling momentarily tanked to as low as US$1.15, the British currency has not regularly traded at these levels since 1985.

London-listed stocks most exposed to the British economy also fell yesterday. It is relatively rare for the export-heavy FTSE 100 to move in lockstep with sterling, but losses in companies more exposed to the domestic economy, such as banks and house builders, offset gains in big globally-focused firms.

British retailers also saw their sales flatline last month as shoppers cut back on non-essentials and some households stockpiled food ahead of Brexit, surveys showed yesterday. Annual total sales growth fell to zero from the weakest July rise on record of 0.3 per cent, said the British Retail Consortium, which groups major high-street chains and supermarkets.

That pushed down the average pace of sales growth over the past 12 months to 0.4 per cent, the weakest since the retail consortium began its data collection in 1995.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on September 04, 2019, with the headline 'Brexit fears send British consumer confidence to 6-year low'. Print Edition | Subscribe