Growing fears of a British exit from the European Union has knocked confidence among UK consumers, which remains stuck at its lowest level in more than a year, according to a report.
Market research firm GfK said its consumer sentiment indicator stayed at zero in March, unchanged from February its joint lowest level since December 2014.
Consumers’ confidence in the UK economy over the next 12 months tumbled by 18 points to -12, from +6 in March 2015.
Joe Staton, head of market dynamics at GfK, said the decline could be blamed on “Brexit jitters”. He said: “Despite good economic headlines about low inflation, interest rates and prices in the shops, concerns about Brexit and the ongoing eurozone crisis appear to be hitting home.”
The chancellor, George Osborne, has repeatedly warned that Britain faces a “dangerous cocktail” of risks from the world economy. Many economists predict UK economic growth will suffer, at least in the short term, if voters decide to leave the EU in the 23 June referendum.
The Bank of England warned this week that a vote to leave could cause a run on sterling, a credit crunch and higher interest rates for mortgage holders and businesses. The Bank’s financial policy committee judged that the closely fought campaign posed the “most significant near-term” domestic risk to financial stability.
The GfK survey, carried out on behalf of the European commission, showed consumers were slightly more upbeat about the outlook for their finances over the next 12 months, with a reading of 9 for March, up from 7 a year ago. Even so, they were less willing to spend on big-ticket items than in February.
GfK’s findings came as a separate study by Lloyds Banking Group showed UK business confidence bounced back from a two-year low. Optimism among businesses rose by 15 points to 43% for March, from a net balance of 28% in February.
This was driven in part by an upbeat outlook from consumer services, and less concern about market volatility. The net balance of firms reporting an improvement in their economic prospects increased to a three-month high of nearly 40% in March, and a similar number expect to take on more staff over the next 12 months.
