British consumer morale steadied in March but households remain downbeat about the outlook for the economy as the process of leaving the European Union gets underway, a survey showed on Friday, Reuters reports.
GfK’s monthly consumer sentiment index was unchanged at -6 in March, marginally better than the median forecast of -7 in a Reuters poll of economists.
The outlook for consumer spending is critical for Britain’s economy ahead of the divorce with the EU. Consumers kept up their spending in 2016 after June’s Brexit referendum shock but there have been signs that they are turning more wary.
“Consumers remain cagey about the state of their personal finances and the general economic picture for the UK, especially as wage growth fails to keep pace with the rising costs of living,” Joe Staton, head of market dynamics at GfK, said.
The survey’s gauges of economic expectations, personal finances and spending were largely unchanged from February, which may reassure policymakers that signs of a slowdown in consumer spending are not intensifying.
Official data last week showed annual pay growth, adjusted for consumer price inflation, fell to 0.7 percent in the three months to January, its lowest since October 2014.
Weak pay growth has helped to convince most Bank of England policymakers to keep borrowing costs at their record low, despite the pick-up in headline inflation.
But last week one BoE’s policymaker voted to raise record-low borrowing costs because of growing inflation pressures and the economy’s resilient response so far to Britain’s decision last June to leave the European Union.
Other policymakers said they could soon follow suit, depending on inflation and growth data.
BoE data on Wednesday showed consumer lending in the three months to February rose at the weakest rate since July 2015 as annualised growth slowed sharply.