1st Dec 2016
The fallout from Brexit has weakened UK consumer confidence, suggests a new index from Moneysupermarket.com. The index’s score – based on enquiry data collected on the price-comparison website’s insurance and financial services channels – has fallen by six points since July.
Here are five things we learned from Moneysupermarket.com’s latest consumer confidence index:
1. Brexit reality appears to be biting
The index has fluctuated significantly since the Brexit vote on 23 June. The score in July stood at 60.50 – its lowest figure for over two years – but then rallied, rising to 66.24 by September. But the score fell six points in October before taking another six-point drop, then hitting a new low in November.
This drop reflects growing concern over how Brexit might affect the UK economy, according to Kevin Pratt, consumer affairs expert at Moneysupermarket.com. “There are lots of mixed signals about the bigger economic picture at the moment and that climate of uncertainty is clearly feeding through to how Brits feel about their finances,” he said.
2. Motorists move into the slow lane for payments
The proportion of people requesting car insurance quotes who would prefer to pay annually rather than monthly has fallen by 1.27 per cent to 53.84 per cent since July. This signals a decrease in consumer confidence, with fewer motorists confident they can afford to pay their premiums in one go upfront.
3. More people are taking credit
The proportion of enquiries from people searching for loans to cover debt has risen to 28.49 per cent – a 4.71 per cent increase since July and the highest level since December 2013 – with the increase in borrowing indicating that consumer confidence has fallen.
4. Home is where the heart is
The proportion of home insurance quotes that include homes undergoing building work has seen a 3.18 per cent increase compared to July. Across 2016, this figure has been on a generally upward trend and that uplift is continuing. This trend, in contrast to the other trends highlighted here, suggests an increase in consumer confidence. But it might also indicate that people feel improving their home instead of moving to new one is a safer bet in uncertain times.
5. A festive fall in consumer confidence is nothing new
Although Brexit has unsettled the UK economy, it’s worth noting that other factors traditionally come into play at this time of year. Historically, consumer confidence is lower during the fourth quarter of the year, due to the financial pressures leading up to Christmas.
Faced with a potential drop in consumer confidence, customer service is more important than ever. In her foreword to The Institute of Customer Services’ latest UK Customer Satisfaction Index (UKCSI), its chief executive, Jo Causon, emphasised: “As we come to terms with the uncertain economic and political consequences of the EU referendum, this UKCSI reminds us that a consistent focus on customer service is a crucial ingredient for sustainable performance, especially in challenging times.”