Consumer confidence in August 2020
Overall, consumer confidence continued its stuttering recovery in August. Confidence in the future of the UK economy increased and, although still reflecting deep pessimism, is now at a similar level to 12 months ago when Brexit fears were holding back confidence.
Despite a slight decrease this month, confidence in current household finances remains higher than before the coronavirus crisis, with many consumers reporting that their current finances are good.
The proportion of those who are employed but not working as usual, for example those who are furloughed, decreased to 9% of our sample. This compares to a high of 22% in April.
A bumpy recovery in consumer confidence
The recovery in consumer confidence has not been smooth, but the August survey of Which?’s Consumer Insight suggests that it is continuing to improve.
The most notable change this month was an increase in confidence in the future of the UK economy. This increased 17 points from -55 in July to -38 in August. Whilst this means that a large majority of people still believe that the UK economy will worsen over the next 12 months and confidence in the economy as a whole is considerably lower than confidence in household finances, it is a significant improvement on the low of -79 reached in April.
By contrast, confidence in the current state of the UK economy remains desperately low at -74 in August, with just 4% believing that the economy is in a good state, and the vast majority (78%) thinking it is in a poor state. However, the fieldwork for our survey did coincide with the announcement that the UK economy is officially in recession on 12th August.
As throughout the crisis, people are more confident in their own household finances than in the wider economy. Confidence in current household finances decreased in August to +31, but this was from a record high in July and it is still higher than pre-pandemic levels. Although this may seem counterintuitive given the economic downturn, our analysis from last month found that many households saved more than usual during the lockdown and so their household finances are actually healthier than pre-crisis. August’s measure of confidence in future household finances remains around the same as in July, at -11.
Overall, consumer confidence has had a stuttering recovery, but it seems to be recovering. If we focus on measures about the future then they are at similar levels to twelve months ago when Brexit concerns were holding down confidence.
The proportion of workers on furlough is decreasing
Our tracker results over recent months have indicated that those who have been furloughed, put on enforced leave or given reduced hours due to the coronavirus crisis are less optimistic about their household finances. This month, confidence in the current state of their household finances was +8 among this furloughed group, compared to +31 among those working.
However, the proportion of people in our sample who report being furloughed, on reduced hours or taking enforced leave as a result of the crisis is decreasing and this has been mirrored by the growth in the proportion of people who are working as usual.
In April, when this data was first collected, 22% of our sample reported being in this group. This proportion has declined since with the biggest drop occurring between June and July, which coincided with many non-essential businesses reopening.
August is the first month for which employers must pay towards the costs of furloughed workers, but this does not seem to have had a big effect yet on the proportion of workers in our sample who report being furloughed, on reduced hours or taking enforced leave, which fell only slightly to 9%. This suggests that businesses still want to keep these people employed and are keeping their options open. However, if a significant number of people continue to be in this situation in the next two months then pressure will increase on the government to extend the job retention scheme.
The fieldwork was conducted by Populus on behalf of Which? between 12th and 14th August 2020. A sample of 2,083 consumers was surveyed and weighted to be nationally representative according to a range of demographic characteristics.
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