Consumer confidence in the UK rose for the sixth successive quarter to surpass the global average for the first time in more than nine years. It was further announced that UK positivity about job prospects and personal finances are both at higher levels than before the 2008 financial crisis.
The “UK Consumer Confidence Index” rose from 97 in Q1 2015 to 99 in Q2 2015, whilst the global level dropped from 97 to 96. The last time the UK index was higher than the global average was in Q1 2006 (101 vs. 96), when Tony Blair was in his third term as prime minister and the official interest rate was 4.5 per cent.
The UK also overtook Germany (which dropped from 100 to 97) for the first time in more than five years (since Q1 2010 – 80 vs. 74). Consumers in the UK are now the second most confident in Europe, behind Denmark (112) the fourth most confident country globally.
Nielsen UK & Ireland managing director Steve Smith explained that the consumers in Britain were feeling more confident. Wage inflation is starting to outstrip price inflation for the first time in years, while mortgage rates are at historically low levels and unemployment has generally been falling.
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He said: This positivity is reflected in the cornerstone of household budgets: grocery spending. The number of UK consumers switching to cheaper grocery brands in order to save money is at its lowest level (30 per cent) since late 2009. This is an encouraging sign for retailers that consumer purse-strings may be starting to loosen.
The Consumer Confidence Index for Europe stands at 79. Denmark has the highest index (112) in Europe, while Ukraine has the lowest (48).
However, the report suggested that consumer confidence could be dampened by a potential rise in interest rates and the EU referendum.
Howard Archer, chief economist at IHS Global Insight, said: “Interest rates will highly likely rise modestly during 2016 and fiscal policy will be tighter. There is also the very real possibility that uncertainty ahead of the referendum on UK membership in the European Union may dampen economic activity particularly business investment later on in the year. The referendum is expected to occur by the end of 2017 but could well happen in the latter months of 2016.”
In Europe, Greece had the largest quarterly decrease in confidence among the 60 countries, plummeting 12 index points to 53.