How does UK economic confidence compare to the rest of the world?
According to information and insights company Nielsen, global consumer confidence rose in the second quarter of this year thanks to more optimism about jobs, finances and spending in the United States, China and Japan.
Around the world, Indonesia remains the most bullish consumer market, followed by the Philippines, which pushed India into third place. Meanwhile, Portugal retained its position as the most pessimistic consumer market in the survey, which was taken before a political crisis in Portugal deepened. Hungary and Italy tied for the second most downbeat markets.
Europe remains the world’s least confident area. In the face of budget cuts, tax rises and high unemployment, consumer confidence actually fell in 14 of 29 European markets.
“The European consumer is in a holding pattern, and in fact, at Nielsen we see a distinct set of tiers with German consumers being the most confident, followed by consumers in the UK, France, and then Italy and Greece where confidence is both low and also falling,” says Venktatesh Bala, chief economist at The Cambridge Group, a part of Nielsen.
It’s obvious that the fragility of our economy is holding UK economic confidence back, but when will consumer confidence return to our shores? Well according to recent figures; it’s definitely on the up already, but whether it has the fortitude to stay up remains to be seen. We’ve had so many false dawns already we shouldn’t be under any illusions that it’s anything other than temporary.
Recent research by YouGov and the Centre for Economics and Business Research (CEBR) think tank shows the mood among UK households is the most optimistic it has been since the coalition came to power in April 2010. Amazingly, the report puts ‘consumer confidence index’ at 104.6 – the highest level for more than three years. YouGov and CEBR believe the resurgence is down to a number of factors – including rising house prices and improving job security.
‘British households are pulling out of a nosedive and consumers’ economic optimism is moving in the right direction,’ says YouGov’s Stephen Harmston. ‘With consumer spending accounting for so much of GDP, households have a key role to play in economic growth.’
As ever, every silver lining has its cloud, and the report warns that many households still expect their financial situation to deteriorate over the next 12 months as rising prices eat into wages and savings.
Douglas McWilliams, chief executive of the CEBR, said the ‘key question’ was how long the ‘uptick’ in the economy can last. ‘There are fragilities beneath the surface,’ he says. ‘Nonetheless, we are seeing real, sustained improvement in the UK economy. It’s the first time we’ve been able to say that since the initial recovery from deep recession in 2009.’
Interestingly, the YouGov figures are also backed up by a report from market research company GfK. The company has said that its monthly consumer confidence index rose to -16 from -21 in June; the highest reading since April 2010.
“There is now no doubt that consumer confidence has recovered strongly from the unparalleled trough of the past five years,” says Nick Moon, managing director of GfK. “However, it is the longer-term changes that mean far more than one single month’s figures, and the current trend is definitely upwards.”
Interestingly, GfK sites slightly more down to earth reasons for this increase in confidence than YouGov, saying that the hot and sunny weather during July helped to lift consumer morale. Widespread discounts and offers are also likely to have brightened consumers’ mood, as shop prices fell in July at their fastest pace since January 2007.
So much for rising house prices and better job prospects, long may the good weather continue.