Scottish consumer confidence lowest in UK

GfK’s long-running monthly UK Consumer Confidence Index dropped 11 points in July (since the June interviews conducted before the Referendum) from -1 to -12.

Average consumer confidence in the UK is now the lowest since November 2013, but far from the record lows of minus-39 during the height of the credit crunch.

The results were based on a survey of 2,000 UK residents by GfK and covers everything from attitudes to saving to whether consumers consider it a “good time to buy”.

The survey dates back to 1974 and July sees the sharpest month-by-month drop for more than 26 years (March 1990).

This is also a further 3-point drop from the -9 recorded by the Brexit Special in early July. All five measures used to calculate the Index saw decreases this month.

The report also found consumer confidence is lower in Scotland than anywhere else in the UK, with warnings that the prospect of a second independence referendum risks exacerbating the economic uncertainty north of the Border.

Confidence in Scotland nose-dived by 14 points to minus-22 in the first two weeks of July, nearly twice as low as the UK average of minus-12.

Joe Staton, head of market dynamics for GfK, said calls for a second independence referendum as a result of the Brexit vote was further dampening the mood on Scottish high streets.

Mr Staton said: “If anything, you’ve got more uncertainty built into the system (in Scotland) than the rest of the UK.

“I was in Scotland during the referendum and I could see the uncertainty and the schisms developing between people – it was very much like what we’ve just been through across the UK, and potentially Scotland is going to go through it again.”

However, Mr Staton also explained that he believes that there is scope for a tempering of anxiety as the July poll had been carried out at the peak of the post-referendum sensitivities and there was good reason to expect a levelling out of consumer confidence by the time of the next survey would show, uncertainty, prior to Theresa May taking over as prime minister. He cautioned against “talking ourselves into a recession”.

He said: “We are all reacting – or over-reacting – to what has been a shock to the system, personally, politically and economically, so I would look for a rebalancing.

“Low confidence means we feel less inclined to spend, less inclined to invest, we become very shorttermist in our outlook and, as we know, the economy across the UK is driven by the service sector which is dependent on people spending and being willing to splash the cash.

“If people retrench and retract too far, then that will have negative implications on the overall GDP.”