Consumer confidence edges back down as economic jitters continue

UK consumer confidence slipped back down in October, as the state of the economy continues to give Britons the jitters.

The long-running measure of consumer confidence fell back to a negative reading of 10 overall, GfK will announce today on behalf of the European Commission, jointly the second lowest score since the immediate aftermath of the EU referendum.

Economic growth across the UK economy picked up slightly in the third quarter, according to preliminary data released last week, but consumers continue to struggle under the burden of high inflation, which hit three per cent in the year to September.

Read more: Consumer confidence moves back up but business remains unconvinced

Rising inflation, which reduces the amount people earn in real terms, has been a crucial factor stopping growth from stepping into a higher gear over the course of 2017, although the latest survey gave some evidence of an improvement, as the personal finance component improved by a point.

However, business confidence appears to have responded more strongly to the stronger economy. A survey of British businesses by Lloyds Bank showed overall confidence improving by three points, with a net balance of 26 per cent of firms saying they have a positive outlook.

Read more: Weak economic outlook holding back business investment

Firms grew much more confident on the prospects for their own businesses, which improved by six points from September. Some 48 per cent expect higher business activity in the next year.

The survey found a small upward shift in optimism about the economy, although overall confidence remained well below its long-term average.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The increases in both business prospects and economic optimism signal that the economy continued to expand in the third quarter, but at a moderate pace.”

Read more: UK inflation rises, adding to pressure on rates