Consumer retreat as economic fears eat into spending

Picture: Getty

Picture: Getty

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Consumer confidence has taken a tumble in the opening months of the year, driven by increasing concerns about health and wellbeing, a survey today suggests.

The slide in the first quarter was driven partly by an unusually large seasonal drop in confidence about general wellbeing as the flu season arrived later than usual and media coverage focused on health issues such as the sugar tax debate, according to Deloitte’s latest consumer tracker report.

The quarterly poll of some 3,000 British consumers found the confidence reading for health and wellbeing had fallen by six points from the same period last year to its lowest level since the survey began in 2011.

Consumer spending has been underpinning Britain’s economy recovery, though figures this week are exepcted to reveal a slowdown in gross domestic product (GDP) expansion during the first quarter of 2016.

Economists believe growth could have halved from the final quarter of 2015 to just 0.3 per cent.

Deloitte’s head of consumer business research, Ben Perkins, said: “The UK’s consumers are increasingly health-conscious. The flu season arriving later than usual and extensive media coverage around health in the first three months of the year seem to have focused consumers’ attention on health and wellbeing as an issue.

“In addition, the recent sugar tax debate, as well as the growing use of health and fitness wearables and apps may also be increasing consumers’ awareness of their own wellbeing.”

The tracker indicated that consumers have become more measured in their spending and are expected to spend more on essentials, such as groceries, and less on utilities and big-ticket items in the coming months, possibly in anticipation of political and economic uncertainty in the short term.

The confidence gap between homeowners and non-homeowners is now at its widest point since the tracker began, the latest survey found, with non-homeowners reporting a four point fall in confidence from the previous quarter.

London-based consumers were significantly less optimistic than those in other parts of the UK, with overall confidence in the capital falling by ten points year-on-year.

Ian Stewart, chief economist at Deloitte, said: “For UK consumers, homeownership is synonymous with financial security. Those in ‘generation rent’ are starting to feel the impact of private rental prices having outstripped wage increases in recent years.

“London, with its particular exposure to developments in the global economy and financial markets, has seen a particularly marked drop in confidence.”

Stewart added: “Greater risks in the global economy and domestic uncertainty in the run up to the EU referendum on 23 June seem to have unsettled consumers.”

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