LONDON (Reuters) – British consumer sentiment fell this month by the most since a slump at the start of the coronavirus pandemic as lockdown restrictions tightened across much of the country, according to a long-running survey published on Friday.
The GfK Consumer Confidence Index tumbled to -31 in October, its lowest level since late May and down sharply from a nine-month high of -25 in September, as well as being below all forecasts in a Reuters poll of economists.
The six-point fall in the index in the space of a month was the largest since the 25 point decline recorded just after the start of the lockdown in March.
“There’s a worrying threat of a double-dip in consumer confidence as concerns for our personal financial situation and even deeper fears over the state of the UK economy drag the index down,” GfK director Joe Staton said.
The index showed an especially large 12-point decline in households’ outlook for the economy over the next 12 months.
Polling took place between Oct. 1 and Oct. 14 – before big cities such as Manchester moved to the highest tier of COVID lockdown – and GfK warned that sentiment risked falling further.
Strong household demand has been the mainstay of Britain’s recovery from the initial shock of the coronavirus lockdown, when output contracted by 20%, more than in any other major advanced economy.
Retail sales in July and August were above pre-pandemic levels, and the number of house purchases in September was close to its level a year earlier.
Bank of England Chief Economist Andy Haldane said on Thursday that consumer spending had been unexpectedly resilient in Britain, and noted that in the United States a second wave of COVID cases had done little to dent spending there.
But other economists worry that a big part of the rebound has been driven by pent-up demand which is likely to fade, especially if unemployment climbs steeply in the final months of the year like the BoE forecast in August.
Britain’s main furlough programme expires at the end of this month, and finance minister Rishi Sunak announced a fresh set of changes to its replacement on Thursday following warnings from business that it did too little to preserve jobs.
GfK conducted the survey on behalf of the European Commission.
(Reporting by David Milliken, editing by Andy Bruce)