London Remainers drag down consumer confidence in the capital
London consumers are feeling less confident than the rest of the UK, data out today shows.
Confidence fell in London during the third quarter despite climbing to a five-year high across the rest of the country, according to the latest survey from accountancy giant Deloitte.
Consumer sentiment in the capital fell by three percentage points over the three months to mid-September, and is now nine per cent lower than it was at the same period last year.
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The fall has been put down to Brexit uncertainty, with the majority of Londoners voting to remain part of the European Union in June’s referendum.
“The Brexit vote may be weighing on a region in which 60 per cent of the population voted to Remain and where reliance on financial services, migration, and capital flows are especially strong,” said Ian Stewart, chief economist at Deloitte.
The picture around the rest of the UK is far rosier, with the majority of the country shrugging off post-referendum pessimism.
Confidence jumped by three percentage points from the previous quarter, the largest quarterly increase since the final three months of 2014.
“Consumers are benefiting from favourable tailwinds, including low inflation, low unemployment, and relatively high disposable incomes,” Stewart added.
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The survey also showed that consumer spending shifted from everyday essential items to more discretionary, non-essentials, which rose one percentage point. Spending on essentials, such as clothes and groceries, was flat.
Meanwhile, the UK economy has shown greater resilience than many had anticipated since the EU referendum vote according to the influential EY Item Club economic think tank.
It’s thought the UK will register GDP growth of 1.9 per cent for the year, supported by strong consumer spending (up by 2.5 per cent) and very low inflation (0.8 per cent).
Economic growth is expected to slow over the next two years however as EU uncertainty weighs on performance, falling back to 0.8 per cent in 2017 and 1.4 per cent in 2018.
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“Sterling’s shaky performance this month provides a timely reminder that challenges lie ahead,” warned Peter Spencer, chief economic advisor to the EY Item Club.
The latest data come alongside figures released today by the British Retail Consortium (BRC) and retail analysts Springboard showing spending on the high street rose last month despite a decline in footfall.
Retail spending grew in September by 1.3 per cent, while at the same time both footfall and shop prices have dropped year-on-year.