With so much coverage of the ongoing economic and political uncertainty, the public are being fed an increasing range of news and views that they are finding hard to digest. Not understanding the machinations of Brexit and the politics attached with it are undermining confidence and trust. A large number of polls in the past month have highlighted the stresses that people are feeling as a result of the EU Referendum decision and the subsequent withdrawal negotiations.
Confidence is vital
Confidence is regarded by economists and commentators as a good indicator of the mood of the nation. The longest running measure of confidence among consumers is GfK’s Consumer Confidence Barometer (CCB). January’s measure (-14) is unchanged on December and is the lowest January measure since 2013. It is unusual in that there is no normal New Year bounce. January 2019 is one of only six years since 1989 when there has been no such event.
Within the headline confidence measure worries over the economy weigh heavily; the combined current and future measures are at their lowest since April 2013. Rising employment has helped boost household finances since the EU Referendum and along with the ready availability of credit has helped spending confidence but this may be weakening.
The JGFR Feel-Good Index that combines future measures over the next 12 months of personal finances, inflation, unemployment and the economic situation starts 2019 at the worst level since January 2011 when the economy was recovering from the financial crash.
Business confidence surveys also reflect a pessimistic mood at the start of 2019. The Q1 ICAEW Business confidence is at its lowest (-16.4) since the financial crash in Q2 2009. Deloitte’s Q1survey of CFOs found finance chiefs slashing hiring and spending plans as confidence falls. A recent Federation of Small Business survey among small firms also found confidence at the lowest level since the financial crash. The CBI’s Financial Services Q4 survey found demand at a 5-year low on macro-economic uncertainty.
January’s UK Economic Sentiment measure* published by the European Commission found the ESI at its lowest since July 2016.
To continued reading John Gilbert’s review, please download the full PDF version (top right).