Consumer confidence in the UK plummets in wake of the hung parliament

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LONDON — New data show consumer confidence has slumped in the wake of the UK’s hung parliament, and is only marginally higher than it was in the immediate aftermath of the UK’s vote to leave the European Union.

The latest the Consumer Confidence Index results, based on research by YouGov and the Centre for Economics and Business Research (Cebr), show consumer confidence fell from 109.1 in the week before the election to 105.2 in the week afterwards, its lowest point this year. Analysts point to inflation, negative wage growth and cooling property prices for the drop.

“Consumer confidence has been generally ticking downward since last autumn but the events of the past month have placed it under greater pressure,” said Stephen Harmston, head of YouGov reports. “The hung parliament seems to have further dampened consumers’ spirits, which were already sinking following the continued squeeze on household finances. But the real cause for alarm will be the cooling of the property market,” he said.

Here is the chart for this year:

YouGov/Cebr Consumer Confidence IndexYouGov/Cebr June 2017

The index fell from 111.9 immediately before the Brexit vote to 104.3 immediately afterwards. The average score for June this year, using data from before and after the snap election, is still only 106.9, its second lowest point since 2013.

However, the analysis found that job security and business activity, both over the past month and looking forward, are in stronger positions.

The drop in consumer confidence, said Deputy Chairman of Cebr Douglas McWilliams, will “affect spending in the high street, in shopping centres and online.”

“Meanwhile business confidence is also likely to have dropped, ” he said. “Our preliminary assessment is that economic growth will fall sharply over the coming months and the country will only be saved from recession by strong international trade.”

This contradicts findings from Lloyd’s Bank, released last week, that business confidence has risen significantly over the last six months, particularly among UK-based businesses.

Falling confidence is bad for Prime Minister Theresa May’s government. There is a very rough correlation between the level of consumer confidence and the size of a governing party’s majority in the House of Commons. A fall in the GfK consumer confidence index was linked to the Conservative Party’s loss of seats in the last election.