The October GfK Consumer Confidence index of U.K. declined 1 point to 2, but nonetheless remains elevated compared to historical levels. Each category registered a decline, with the exception of personal financial situation (last & next 12mths) and major purchases (now relative to last 12 months). The most significant decline registered was in unemployment expectations over the next 12 months, registering a 16 point drop, notes Barclays.
Meanwhile, in each category, the outlook over the next 12 months was less optimistic compared with the outlook over the previous, worsening from the September print. Further, the October print underscores the continued divergence in confidence by income tranche, with the poorest in society now at -18.2 and those on more than £50k at 19.7, respectively their lowest and highest prints historically.
While consumer confidence remains elevated in light of improved real wage growth, it appears that consumers are starting to feel less confident about the future owing to global economic worries, with anecdotal evidence from the GfK press release suggesting that "good news on the domestic front is being tempered by concerns about our ability to shrug off the global downturn". This may be weighed on further as the impact of fiscal austerity is felt and inflation picks up at the start of 2016, argues Barclays.
