British consumers grew more pessimistic about the shape of the nation’s economy and about their personal finances in August as worries over Britain’s approaching exit from the European Union grew, according to a survey by market researchers GfK.
The data adds to a troubling picture for the U.K. economy, which unexpectedly shrank in the last quarter–the first contraction since the end of 2012–while the likelihood of a no-deal Brexit has increased in recent days, something economists fear could tip the economy into recession.
GfK’s indicator of consumer confidence slipped to minus 14 this month, the firm said Friday. That suggested a slight uptick in confidence last month was largely a blip in an otherwise downward trend in consumer sentiment. The figure also undershot the average forecast of economists polled by The Wall Street Journal who had predicted sentiment would rise to minus 10.
“Until Brexit leaves the front pages-whenever that will be-consumers can be forgiven for feeling nervous not just about the wider economy but also about their financial situation,” Joe Staton, client strategy director at GfK, said.
British consumers grew more pessimistic about how they expected the economy to perform and about how well-off they thought they would be over the next year. The drop in perceptions of personal finances was significant as the index has generally been weighed down by negative views about the wider economy, Mr. Staton said. A decline in how Britons see their own finances would pull the index sharply lower “to a level that approaches the worrying figures seen in the worst days of the 2008-09 financial crisis,” he said.
GfK’s August survey was the first that had been conducted since Boris Johnson became the U.K.’s new prime minister. Mr. Johnson has adopted a tougher stance in negotiations with the EU on Brexit and has pledged to take the U.K. out of the bloc, “do or die,” on Oct. 31. That includes, if necessary, the option of not having an agreement governing the U.K.’s future trading relationship with the EU, something economists have warned could harm growth.
While Brexit uncertainty has held back business spending, consumer spending has largely held up. GfK’s data, however, showed signs that trend could be changing, Gabriella Dickens, assistant economist at Capital Economics, said.
“Strong employment and wage growth suggest consumers have the ability to spend, although their willingness to spend may falter if the chances of a no-deal Brexit rise further,” she said.
The GfK survey of 2,000 people was conducted between August 1 and 14 and was carried out on behalf of the European Commission.