UK consumer morale hits lowest since records began in 1974: GfK
By Andy Bruce
LONDON, May 20 (Reuters) - Pessimism weighing on Britain's
households has hit unprecedented levels as the cost-of-living
crisis pushed confidence in the economic outlook to its joint
lowest, a survey showed.
Market research firm GfK said consumer morale gauge, dating
back to 1974, touched an all-time low of -40 in May from -38 in
April. Economists polled by Reuters had expected -39.
Past readings this low have presaged recessions and Friday's
survey will further pressure finance minister Rishi Sunak to
give more help urgently to households facing the highest rates
of inflation since the early 1980s.
GfK's gauge of economic optimism for the coming 12 months
matched a record low hit in April 2020 as the coronavirus
pandemic swept the country.
While business surveys and jobs data show a healthier
picture - one reason why the Bank of England has raised interest
rates - this was also the case in 2008 when a severe downturn
followed as the global financial crisis unfolded.
"Consumer confidence is now weaker than in the darkest days
of the global banking crisis, the impact of Brexit on the
economy, or the COVID shutdown," said Joe Staton, client
strategy director at GfK.
Even recessions in the early 1980s and early 1990s - a time
of double-digit interest rates and high unemployment - produced
less pessimism than the current crisis which is playing out
against the backdrop of the war in Ukraine.
Britain's budget forecasters have said households face the
biggest cost-of-living squeeze since records began in the 1950s.
A Reuters analysis of international consumer confidence data
suggested government action now might be warranted.
British consumers are gloomier than their French or German
counterparts have ever been in records that stretch back to
1985, applying GfK's methodology to comparable European
Commission surveys.
Britain has the highest inflation of Europe's big economies
and in the Group of Seven.
Separate data published by Lloyds Bank showed spending on
energy by its customers rose by an annual 28% in April.
The BoE forecasts inflation will top 10% later this year and
investors expect more interest rate increases.
"Nothing on the economic horizon shows a reason for optimism
any time soon," Staton said.
(Writing by Andy Bruce
Editing by William Schomberg)
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