MNI INTERVIEW: UK Consumers Upbeat,Clouds Ahead: GfK Economist

By Irene Prihoda and Les Commons

     LONDON (MNI) - UK consumers are increasingly upbeat about the economic

outlook with signs a recovery in confidence is becoming more entrenched, despite

gathering storm clouds, Joe Staton, Client Strategy Director at GfK told MNI.

     The closely-watched GfK Consumer Confidence Index rose 2 points to -7 in

February, a level it last saw in August 2018. It was last higher in May 2017,

when it touched -5.

     "The index has risen for three straight months and it seems to be deeper

than a simple post-election 'Boris Bounce'," Staton said, pointing to "rising

wages and house prices, low unemployment and stable inflation".

     "Although the Index remains south of positive, the trajectory remains

upwards," he added.

     --VIRUS RISK

     However, he was quick to point to a "known unknown" overhanging the UK

economy at present; coronavirus and the potential downside risk to consumer

behaviour, confidence and spending patterns.

     Staton noted the survey was conducted over the first two weeks of the

month, before the worst news headlines of the virus's spread. "This is a

developing story, watch this space," he said.

     Although factors such as a falling petrol pump prices, currently sitting

nearly 10% lower than in mid-January, were likely to underpin spending power,

Staton warned there was always a chance the government's upcoming budget

statement could throw an unexpected spanner into the works.

     "With a new Chancellor in place, there is always the possibility of a

policy surprise that could slow that consumer, but it's certainly not an

expectation," he said.

     Staton pointed to the continued recovery in the UK consumer's view of the

general economic situation as a good lead indicator of future confidence levels.

"I've got no crystal ball, but if people start feeling better about the overall

UK economy, it is a good guide to their personal outlook," he said.

     Expectations for the general economic situation over the next 12 months

rose 3 points to -21. A year ago, the index slumped to -38.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 0203 865 3814; email: irene.prihoda@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$B$$$,M$E$$$,MC$$$$,MI$$$$,MT$$$$,MX$$$$]