Brexit Jitters Pushed Aside As Consumer Confidence Hits Five-Year High

Brexit Jitters Pushed Aside As Consumer Confidence Hits Five-Year High

UK consumer confidence has shrugged off Brexit jitters to hit a five-year high, a new survey shows.

Deloitte's latest Consumer Tracker showed that confidence recovered to a reading of minus 5% for the the three months to September, compared to minus 8% in the second quarter.

It not only marks a five-year high, but the largest quarterly rise in 18 months.

The survey polled 3,000 consumers from September 16 to 18 and accounted for key indicators including job security, inflation and spending on essentials and discretionary items.

It showed particularly strong gains in confidence surrounding issues such as job security, job opportunities and career progression. Job security confidence rose to minus 4% from minus 10% in the previous quarter.

Meanwhile, spending on essentials like clothes and groceries was flat for the second consecutive quarter, while net spending on discretionary items rose by one percentage point.

"UK consumers have put Brexit fears to one side," said Ian Stewart, chief economist at Deloitte.

"Consumers are benefiting from favourable tailwinds, including low inflation, low unemployment and relatively high disposable incomes," he added.

However, London's consumers have been far less optimistic in the wake of the Brexit vote.

Consumer sentiment in London fell three percentage points in the third quarter, and is now 9% lower than it was during the same period in 2015.

Mr Stewart said: "In an inversion of the usual relationship London's consumers are less upbeat than the rest of the UK.

"The Brexit vote may be weighing on a region in which 60% of the population voted to Remain and where reliance on financial services, migration and capital flows are especially strong."

Deloitte now expects consumers to spend more on essentials going forward, and retail sales to grow into the fourth quarter.

But the official triggering of Article 50 next spring could pose some challenges.

Deloitte said: "Looking further ahead, two events could pose challenges to consumer spending power and sentiment: the prospect of higher inflation and the start of the formal Brexit process in 2017."

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