(Bloomberg) -- U.K. consumer confidence remained weak in August as the specter of unemployment hung over the British economy.
GfK’s key index of household sentiment, which plunged deep into negative territory after the lockdown imposed earlier this year triggered a record recession, was unchanged from July.
The lack of improvement came despite a further easing of the restrictions hampering the economy. Much of the apprehension can be attributed to worries about employment. The government began winding down its wage subsidy-program for furloughed workers this month, leading to warnings that millions of Britons risk losing their jobs unless Chancellor of the Exchequer Rishi Sunak extends support beyond October -- a demand he has so far resisted.
“Employment is now the big issue because the pandemic has ended years of job security,” said GfK’s client strategy director, Joe Staton. Although consumers were slightly more confident about their personal finances in the next year, “this could change quickly when furlough ends and the inevitable redundancies start,” he warned.
The U.K. relies heavily on consumer spending for growth, so encouraging people to return to the shops is crucial to getting the economy back on its feet.
The government’s Eat Out to Help Out program, which picks up part of the tab on restaurant meals during August, has not translated to increased spending elsewhere, according to Staton.
“Yes, discounted dinners have proved a winner with hungry consumers across the country this month, but it’s difficult to see any increased appetite for other types of spending for now,” he said.
©2020 Bloomberg L.P.
