MNI INTERVIEW: UK Consumers Nervy As Conflict Extends - GfK

UK consumer confidence slid to the lowest level in a year in March amid concern over fallout from the conflict in Iran, the head of a leading survey told MNI.

"People simply do not feel the economy is robust enough to ride out the knock-on effects from the Middle East conflict," GfK’s Consumer Insights Director Neil Bellamy said in an interview.

GfK's overall index score dropped by two points to -21 in March, with three of the measures down, one up and one flat compared to last month. According to Bellamy, "a ripple of fear is spreading as is evident from the six-point fall in perceptions of the General Economic Situation over the next 12 months, and also in the four-point drop in the Major Purchase Index". 

Expectations for the general economic situation over the next 12 months slumped six points to -37. This is eight points worse than March last year. GfK's Major Purchase Index decreased by four points to -18, one point worse than a year ago.

The decline in purchasing intentions, coming alongside a six-point rise in the Savings Index, "indicates people are holding on to their money and avoiding making major purchases while they wait to see what the medium-term impact of the conflict will be," Bellamy added. 

The savings index, not a component of the overall index, increased six points to 27, two points better than last year. 

There are two major concerns for the future, he added.

"The UK [government] will need to adopt a careful and balanced response to the wider volatility we have seen since the end of February,” he said. (See MNI INTERVIEW: UK Energy Relief Could Extend Beyond Shock)

"Secondly, with growing concerns over further sharp price rises in the coming months, unless there’s a swift resolution to the conflict, or government schemes such as additional support with energy bills come into fruition, this ripple of fear we are seeing in the March data has the danger of turning into a flood.”

The index measuring changes in personal finances over the last 12 months was unchanged at -7, "but the closely-watched forecast for personal finances over the next year fell one point to 1, the same score seen a year ago". 

The survey ran from March 2 through March 16.