British Consumers Gloomy As German Businesses Soar

Black Friday Sale
Pedestrians walk past a sign on a Miss Selfridge store on Oxford Street on 'Black Friday' in London, Britain November 24, 2017. British consumers are feeling pessimistic as two decades of earnings growth stalls. Simon Dawson/Reuters

Britain's consumers are feeling gloomier than at any point since just after the Brexit vote, according to a survey released amid warnings of two punishing decades of lost earnings growth.

By contrast in Germany, despite a post-election standoff that leaves the country without a new government, businesses issued a strong appraisal of their economy's future prospects in a separate survey released at the same time.

The British study, published on Friday (November 24) by YouGov and the Centre for Economics and Business Research, shows the latest updates to the two companies' regular consumer confidence index.

The index, which is based on up to 7,000 monthly online interviews with Brits aged over 18, now stands at 106.6, down from 109.3 in October.

While a score over 100 means more consumers are confident than aren't, this is lower than any rating since July 2016, when the index last hit this level to mark a three year low.

According to the data, Britons are particularly concerned about their household finances, with a score of 88.5, the lowest since January 2014, representing their appraisal of this aspect of the economy over the past 30 days, and a score of 89.4 showing their level of optimism about the next 12 months.

"The big decline in consumer confidence means we are back where we were immediately after the Brexit vote," said Stephen Harmston, Head of YouGov.

"There have been falls across the board—from how secure people feel in their jobs to what they think house prices will do—and the increased cost of living has put a big squeeze on people's household finances. Overall, these are a gloomy set of consumer confidence figures."

The wobble among British consumers stands in stark contrast to buoyant new data on the outlook of businesses in Germany.

The latest IFO Business Climate Index, a closely-watched measure of German business confidence, hit a new record high on Friday of 117.5, up from 116.8 in October.

In a press release, the IFO Institute, which composes the index, said: "The German economy is on track for a boom. The latest figures indicate economic growth of 0.7 percent in the fourth quarter, pointing to growth of 2.3 percent for 2017 as a whole."

The IFO Business Climate Index is based on about 7,000 monthly survey responses from companies in the manufacturing, construction, wholesaling and retailing sectors.

The data comes after two days of pessimistic appraisals of the future health of the British economy.

On Thursday, Paul Johnson, the economist and director of the Institute for Fiscal Studies (IFS) think tank, said that the country's prospects were poor.

Referring back to forecasts provided Wednesday alongside the budget by the independent Office for Budget Responsibility (OBR), Johnson said at a briefing for journalists that "The forecasts for productivity, earnings and economic growth make pretty grim reading."

He warned that GDP per capita is set to be 3.5 percent smaller in 2021 than previously thought, marking a "£65 billion loss to the British economy," and that average earnings could be £1,400 a year lower than once expected.

"We are in danger of losing not just one but getting on for two decades of earnings growth," Johnson said.