UK shopper confidence has fallen to its lowest degree because the spring as coronavirus restrictions tightened throughout the nation, pointing to a brand new downturn that threatens the survival of many companies, significantly within the hospitality sector.

The GfK shopper confidence index dropped to minus 33 in November, two factors decrease than within the earlier month and the bottom studying since Could.

Shoppers have been significantly pessimistic about their monetary state of affairs, reflecting excessive uncertainty over jobs and enterprise survival, which analysts stated may level to weakening spending.

“Individuals are clearly shedding their nerve relating to their private funds,” stated Joe Staton, shopper technique director at GfK. “This may deal a blow to any future rebound as a result of bullish shopper spending fuels the UK economic system and low confidence is the enemy of restoration.”

Shopper spending was the engine of the UK financial rebound within the third quarter, however falling shopper confidence and lowered spending alternatives as many companies are shut, level to a brand new contraction within the autumn, often the busiest interval for a lot of retailers.

Line chart of Index showing UK consumer confidence falls to a six-month low

The GfK shopper index was based mostly on interviews performed between November 2 and 13, overlaying the interval when the lockdown in England began on November 5 however earlier than the announcement of promising outcomes for Covid-19 vaccines. It’s calculated as a distinction between the proportion of shoppers reporting constructive views minus these with adverse opinions on their monetary circumstances and on the nation’s financial state of affairs.

The figures have been launched as analysis from Fable Information, an organization that tracks bank card transactions, confirmed UK shopper spending contracting 8.8 per cent within the week ending November 15 in comparison with the identical interval final 12 months, marking a sudden reversal of the enhancements seen over the summer time.

The spending contraction was broad-based throughout sectors however was pushed by plunging expenditure in bars and eating places reflecting the closure to sit-in prospects in England.

However whereas the restrictions resulted in rising grocery spending, “we’re not seeing panic shopping for throughout the grocery sector, as we noticed via the primary lockdown interval,” stated Avinash Srinivasan, an analyst at Fable Information. Spending in eating places and meals supply “carried out higher” than within the spring, presumably reflecting the presence of extra takeaway and meals supply choices.

Regardless of the flexibility to adapt to restrictions and social distancing measures, multiple in three companies within the hospitality sector stated they’d little or no confidence that they’d survive the following three months, in accordance with separate knowledge revealed by the Workplace for Nationwide Statistics.

That is the very best proportion of any sector, and double that throughout the economic system.

Bar chart of UK, share with no or low confidence that they would survive the next three months, Nov 1 to 15 showing Many businesses in the hospitality sector doubt they will survive

Based mostly on a survey of greater than 5,000 companies collected between November 1 and 15, the ONS additionally discovered that 44 per cent of companies within the hospitality sector had money reserves lasting solely as much as three months, the biggest proportion of any sector.

Solely 18 per cent of these companies reported having money reserves lasting for longer than six months.

Howard Archer, chief financial adviser on the EY Merchandise Membership, a consultancy, stated: “These figures do gas considerations over near-term job prospects . . . and so they additionally recommend that numerous corporations should lay off employees regardless of the furlough scheme extension.”


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