Consumer sentiment has plummeted due to coronavirus, although it has yet to fall to the levels reported during the 2008 financial crisis, according to the latest research.
Sentiment dropped 29 points to minus 26 between December last year and this March, the sharpest quarterly fall in more than 10 years.
However it is higher than the minus 51 recorded after the collapse of Lehman Brothers in October 2008, suggesting that some of the economic measures announced by the government last week have cushioned the financial blow for many.
Consumers younger than 28 reported a steeper drop in sentiment, which fell by 58 points – compared to an 11 point decline for those aged 65 and older- reflecting their heightened exposure to sectors heavily negatively impacted by the coronavirus outbreak.
The survey by accountancy firm PwC was carried out last weekend following the government’s advice for people to work from home and avoid social interactions, but before the Prime Minister’s announcement on Monday that further restricted movement.
Lisa Hooker, Consumer Markets leader at PwC, said: “It is no surprise that the impact of Covid-19 has prompted such a significant decline in consumer sentiment.
“Following a period of high employment and rising real wages, many households are facing the prospect of job and wage insecurity at a scale which they may never before have experienced in their lifetimes.
“Despite the magnitude of the challenges facing the country, government intervention in the past week does seem to have cushioned the blow for many families, for example, through wage guarantees for furloughed employees.
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“The question is whether this will be enough to hold up consumer sentiment should the current lockdown measures last longer than expected.”
She added: “But these results do give confidence that consumer sentiment, and therefore spending intentions, have the potential to bounce back quickly once the crisis abates.”