Consumer confidence has taken a hit after its sharpest drop in 21 years, following the UK’s decision to leave the European Union, according to a survey.
Market researcher GfK said its the one-off post-referendum consumer confidence index fell eight points to minus nine – a fall it hasn’t seen since December 1994.
The survey suggests that 60% of consumers expect the economy to contract over the next year, up from 46% in its June survey. Just 20% expect the economy to improve.
While consumer spending accounts for around 60% of the UK’s economy, many respondents said they plan to reduce their spending in the wake of the Brexit vote.
Those in the north of England and Scotland are expecting the biggest drop in the economic situation, which a 19 and 11 point fall in consumer confidence, respectively. While those in the south of England said confidence was down just two points.
A third of consumers expect prices to rise rapidly over the next 12 months, up from just 13% in June’s survey.
Joe Staton, head of market dynamics at GfK, said: “Our analysis suggests that in the immediate aftermath of the referendum, sectors like travel, fashion and lifestyle, home, living, DIY and grocery are particularly vulnerable to consumers cutting back their discretionary spending.”