UK consumer spending confidence hits a new high but economy becomes top concern

By

Barbara Santamaria

Published
Feb 21, 2017

British consumer spending confidence remained buoyant in 2016 despite Brexit blues but Britons are now far more worried about the economy than they are about terrorism, revealed the latest Nielsen Global Survey of Consumer Confidence and Spending Intentions.

The index finished the year at 102, representing a one point improvement from a year earlier and much higher than the European average of 81. Britain was also Europe’s fourth most confident country behind Denmark, the Czech Republic and Switzerland, compared to second a year ago.

Across Britain, all consumer sentiments relating to personal finances, spending intentions and cutting costs were more positive at the end of 2016 than the beginning, except job prospects. 

53% of Brits were positive about making purchases, marking the highest level on record.

The survey also revealed that the state of the economy has become the nation’s biggest concern, overtaking terrorism and immigration. 28% of those surveyed cited the economy as their top concern, while the proportion of people worrying about terrorism dropped 12% to 20.

“As the political and economic planning for Brexit gets underway, concerns about jobs leaving the UK have unsettled consumers, as did the US election,” said Steve Smith, managing director, Nielsen U.K. and Ireland. 

“However, times generally remain good for British consumers, with strong employment and wage growth that rose slightly ahead of price inflation during the last year. In addition, disposable income remains stable, while tax benefits for the lower paid and a rise in the minimum wage have reduced income inequality. As a result, consumer spend continued to be the engine of UK GDP growth in 2016.”

But the positive consumer sentiment could undergo change this year as inflation rises.

"In the last quarter, we’ve seen the first signs of rising inflation in the UK. Rising petrol prices being a primary example, seeing the third biggest jump in consumer concern. We now expect to see the start of price increases for consumer staples early this year and maybe cases of ‘shrinkflation’ as the industry looks to minimise the price increases being passed on to shoppers,” said Smith.