Consumer confidence drops amid ‘ripple of fear’ about Middle East conflict

Confidence in the general economy has fallen significantly as “a ripple of fear” spreads about the effects of the Middle East conflict, figures show.

GfK’s long-running consumer confidence index dropped two points to minus 21 this month amid expectations of further sharp price rises.

Expectations for the general economy over the next 12 months have slumped six points to minus 37 – eight points worse than this time last year.

The forecast for personal finances over the next year also fell, but by one point to one – the same score as last March.

However, the major purchase index – an indicator of confidence in buying big ticket items – fell four points to minus 18, one point lower than last year.

In an indication that consumers are adopting a “wait-and-see” approach to the knock-on effects of the conflict, the savings index increased six points to 27.

Neil Bellamy, consumer insights director at GfK, said: “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.

“People simply do not feel the economy is robust enough to ride out the knock-on effects from the Middle East conflict.

“Moreover, the decline in purchasing intentions, coupled with 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.”

He added: “There are two major concerns for the future. First, the UK will need to adopt a careful and balanced response to the wider volatility we have seen since the end of February.

“Second, 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.”