UK consumer confidence index increases 1 point in December after 'turbulent' Brexit year

The UK consumer confidence index rose by one point in the last month of 2016 after experiencing a "roller-coaster year" owing to uncertainties surrounding Brexit, market research institute GfK said in its latest release dated Thursday, 22 December.

The consumer confidence index reached -7 in December, with the index measuring changes in personal finances during the last 12 months dropping by one point in December to 0, which is down three points from the year-ago period. The measure for the general economic situation during the last 12 months dropped one point to -26 in December, which is 21 points lower than December 2015.

The German research firm noted that the forecast for personal finances over the coming one year has increased by one point in December to +3, but it is six points lower than December 2015. The general economic situation over the next 12 months has decreased one point to -23 this month, 17 points down from December 2015.

Joe Staton, head of Market Dynamics at GfK, termed 2016 a "turbulent year" for confidence in the UK, which saw consumers reacting to "the dramatic economic and political turmoil" of 2016. He said that the year started on a positive note but the index began plunging rapidly after the Brexit vote in June.

"After a positive start to the year [January 2016, +4] the index plunged rapidly in post-Brexit Britain [July 2016, -12] with the recovery to September then evaporating by year end to limp home at -7 for December," Staton said.

"While consumers remain relatively confident about their personal financial situation, confidence in the general economic situation for the UK has collapsed in the face of uncertainty about the future both at home and abroad.

"Looking ahead to 2017, against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress (Sturm und Drang) of the year to come," the analyst said in the report.