Brexit worries drag on UK consumer sentiment – GfK

UK

LONDON (Reuters) – British consumer morale slid to a three-month low in October, dragged down by worries about the economic outlook in the run-up to Brexit, a survey showed on Wednesday.

FILE PHOTO: A shopper walks through the underpass of Elephant and Castle traffic roundabout in south London, Britain October 5, 2015. REUTERS/Neil Hall

The headline consumer confidence index from market research firm GfK fell to -10 in October, as expected in a Reuters poll of economists, from -9 in September.

The index is not seasonally adjusted and has a tendency to fall every October. Nonetheless, details within the survey showed that Britons’ worries about how the economy will fare over the next 12 months had risen to the highest since December.

With Britain scheduled to leave the EU in March, Brexit talks have stalled over a disagreement on the so-called Northern Irish “backstop”, an insurance policy to ensure there will be no return to a hard border on the island of Ireland if a future trading relationship is not agreed in time.

“The prospect of a no-deal/hard-deal Brexit must surely be weighing heavily on people’s minds, injecting a mood of despondency as to how people view their future personal finances and the longer-term economic outlook for the UK,” Joe Staton, director of client strategy at GfK, said.

He also highlighted a drop in the major purchases index — something that could spell trouble for retailers ahead of the crucial Black Friday and Christmas selling periods.

A Confederation of British Industry survey on Tuesday showed retail sales had grown much more slowly than forecast in October.

The figures are likely to interest Bank of England officials who are preparing their latest quarterly outlook for Britain’s economy, due to be released at 1100 GMT on Thursday.

Other surveys of consumers from IHS Markit and Thomson Reuters/IPSOS have also pointed to rising worries among households about the financial and economic outlook ahead of Brexit.

GfK’s survey of 2,001 people was conducted between Oct. 1 and Oct. 15 on behalf of the European Commission.

Reporting by Andy Bruce, editing by David Milliken

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