U.K. consumers are feeling just as gloomy as they were after the Brexit vote a year ago.
An index of consumer confidence dropped to 106.9 in June, a level only slightly higher than its post-referendum low, according to a report from YouGov and the Centre for Economic and Business Research on Tuesday. In the days after the U.K.’s general election earlier this month -- in which Prime Minister Theresa May lost her parliamentary majority -- the index plunged to 105.2.
Political uncertainty, rising inflation and a struggling housing market are all weighing on sentiment, the report said.
Consumer Mindset
“The hung parliament seems to have further dampened consumers’ spirits, which were already sinking following the continued squeeze on household finances,” said Stephen Harmston, head of YouGov reports. “But the real cause for alarm will be the cooling of the property market, as this is one of the key things that has propped up consumer confidence over the past few years.”
Economic growth slowed to 0.2 percent in the first quarter of the year and only strong international trade will prevent a recession going forward, CEBR Deputy Chairman Douglas McWilliams said.
Trade-Off
Weaker growth and accelerating inflation have left Bank of England policy makers with a trade-off between reining in price-growth and supporting the economy. They also face the puzzle of why wage growth has remained so subdued, even with the lowest unemployment in four decades.
A separate report from job-search engine Adzuna showed that average advertised salaries have increased by 1.6 percent over the last six months. Business activity and job security measures are still resilient, YouGov and CEBR said.
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