LONDON — U.K. consumer confidence plummeted to a 12-month low in June following the country’s vote to leave the European Union.
Only the over-45s see a silver lining, according to Verdict Retail’s monthly consumer confidence tracker.
Each month the British retail agency and consulting firm combines 2,000 consumers’ views about the economy, personal finances and future retail spending.
Verdict said Wednesday that almost six in 10 consumers expect the U.K. economy to worsen over the next six months, while only one in 10 expect it to improve.
Nearly 40 percent said they expect to spend more on food and grocery at the expense of less essential spending on clothing and entertainment.
Verdict said 59 percent of consumers are expecting a worsening of the economy over the next six months, up 24 percentage points on last month.
“Many consumers are tightening their belts on nonessential items as a result of expected inflation in essentials,” Verdict said, adding that it’s only the over-45s who are more optimistic than younger generations about the future.
“Household budgets will fall under greater strain, and while Verdict Retail’s future sentiment index indicates that consumers intend to absorb the price rises at the expense of savings, this is likely to prove unsustainable in the long run,” said Zoe Mills, analyst at Verdict Retail.
Earlier this week, the International Monetary Fund slashed its global forecasts for the next two years due mainly to the Brexit vote. In Britain, the IMF cut its 2016 gross domestic product growth forecast to 1.7 percent, 0.2 percentage points lower than its April projection. It cut the 2017 forecast to 1.3 percent.
Last week, Moody’s analytics department said it expects U.K. economic growth to moderate to 1.5 percent this year, and to 0.5 percent next year, pointing to the uncertainty around the future trade deals that Britain will have to negotiate once it formally announces that it’s leaving the EU.
Meanwhile, London’s mayor Sadiq Khan has mounted a major social media campaign aimed at telling the world that the city is open for business, #Londonisopen.
“Following the referendum on the U.K.’s membership of the European Union, it is more important than ever to show that our city is united and the capital will continue open for business and open to the world,” he said in a letter to the public earlier this week.
“This is a task that needs us all to work together — to get the best deal for London, to retain our global position and to celebrate our diversity.”