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Sentiment among consumers nationwide rose by 3 percentage points.
Sentiment among consumers nationwide rose by 3 percentage points.

UK Consumer Confidence at Five-Year High

UK Consumer Confidence at Five-Year High

British consumer confidence has risen markedly over the past three months, consultancy Deloitte has reported in its fresh quarterly study. But shoppers in London have a completely different view on the economy.

Consumers in the United Kingdom displayed strong confidence in the country’s economic development despite Britain’s vote to leave the UK, DW reported.

Sentiment among consumers nationwide rose by 3 percentage points from its previous quarterly survey, business advisory Deloitte reported Monday.

This meant that consumers in the country showed the highest level of confidence in five years, with the 3% surge marking the biggest increase since late 2014.

Deloitte pointed out, though, that in London consumer sentiment dropped by 3%.

“The Brexit vote may be weighing on a region in which 60% of the population voted to remain in the EU and where reliance on financial services, migration and capital flows are especially strong,” Deloitte Chief Economist Ian Stewart said in a statement.

Employers there have concerns about Britain’s uncertain future relationship with the EU. Prime Minister Theresa May has signaled she will pursue controls over migration which could reduce the UK’s future access to the EU’s single market.

Deloitte pointed to continued growth in retail sales going into the fourth quarter, but noted that spending power might be challenged in 2017 and beyond, with inflation expected to rise and negotiations on the country’s exit from the EU to start.

 Inflation Set to Rise

Britain’s economy faces a prolonged period of weaker growth as the slump in the value of the pound pushes up prices for consumers, with official figures expected to show a sharp rise in inflation on Tuesday.

The EY Item Club has warned that the UK economy has shown greater resilience than many had anticipated since the EU referendum but this picture is “deceptive”.

The think tank predicts inflation will climb by 2.6% in 2017, before easing back to 1.8% in 2018.

This will cause growth in consumer spending to slow from an expected 2.5% this year to 0.5% in 2017 and 0.9% the year after, the report said.

At the same time, uncertainty around the UK’s future relationship with the EU is likely to weigh on corporate confidence, knocking business investment back by more than 2% in 2017, after a fall of 1.5% this year.

 

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