Mar 2, 2020
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Confidence returning for UK consumers and companies - surveys

Mar 2, 2020

Confidence among British consumers hit its highest level in 18 months in February, and there were fresh signs that companies have also become more positive since December’s election, surveys showed.

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Market research firm GfK’s index of consumer confidence rose to -7 in February from -9 in January, its strongest since August 2018 and a touch higher than the median forecast of -8 in a Reuters poll of economists.

A measure of how willing people are to make major purchases such as a car rose sharply.
“The only ‘known unknown’ is the potential impact of coronavirus on behaviour, confidence and spending patterns,” Joe Staton, client strategy director at GfK, said. “This is a developing story, watch this space.”

A survey of British businesses published by Lloyds Bank showed overall business confidence remained at a 14-month high of 23%, after a run of five consecutive monthly increases.
Companies turned positive about Brexit for the first time since September 2018 and hiring intentions rose for a fourth month in a row.

Hann-Ju Ho, an economist at Lloyds Bank Commercial Banking, said the survey suggested Britain’s economy would grow slightly in the first quarter of 2020 after a flat final quarter of 2019.

The surveys echoed other gauges of the economy which have pointed to a pick-up since the Dec. 12 election in which Prime Minister Boris Johnson won a big majority in parliament.

His victory removed the prospect of further Brexit delays - Britain left the European Union on Jan. 31 - and meant no sharp political shift to the left under the opposition Labour Party.

Signs of optimism among companies and consumers dissuaded the Bank of England from cutting interest rates last month.

Also on Friday, the Confederation of British Industry said confidence in the country’s huge services industry had jumped over the past three months.

Optimism among business and professional services firms rose at the fastest pace since August 2015 and was up by the most for consumer services firms since February 2016, the CBI said, despite a fall in the amount of business.

Investment intentions improved across the sector.

“It’s probably too soon to say whether we’ve turned a corner, particularly as businesses will be increasingly mindful of the risks to the global economy of coronavirus,” Ben Jones, a CBI economist, said.

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