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Brexit Shockwaves Hit UK Consumers, Companies Brace For Slowdown
Shockwaves from Britain's vote to leave the European Union are reverberating through the economy, with surveys published on Thursday showing a dive in consumer confidence and a slowdown in construction
Photo Credit : Reuters
Shockwaves from Britain's vote to leave the European Union are reverberating through the economy, with surveys published on Thursday (28 July) showing a dive in consumer confidence and a slowdown in construction.
Preparing for a Brexit-related slowdown, Lloyds Banking Group said it would cut 3,000 jobs and one of Britain's biggest car dealerships, Inchcape, predicted growth in new car registrations would slow.
Just over a month after the referendum, the latest signals of an economic slowdown are likely to fuel expectations of action from the Bank of England on August 4, when many economists believe it will cut interest rates and might start buying bonds again.
An index of consumer confidence plunged nearly five points to 106.6 in July - matching its biggest fall in six years and hitting its lowest level since 2013, polling firm YouGov and the Centre for Economics and Business Research (CEBR) said.
"The public are still absorbing the EU referendum result but it is clear that consumer confidence has taken a significant and clear dive," Stephen Harmston, Head of YouGov Reports, said.
People are particularly worried about what will happen to the value of their homes, the survey found.
House price growth edged up in July but the data might not yet reflect any impact from the referendum because of a lag, mortgage lender Nationwide said.
Economists say spending by consumers offers the best hope that Britain can avoid a Brexit-related recession. But retailers said sales fell sharply after the referendum, according to a survey published on Wednesday.
BUILDERS, RETAILERS UNDER COSH
In construction, growth in activity slowed after the vote, the Royal Institution of Chartered Surveyors said.
Contributors to a RICS survey predicted a 1 percent rise in workloads over the next 12 months, down from growth of 2.8 percent that they had foreseen in the first quarter.
Britain's property market has been one of the worst hit sectors since the referendum with housebuilders seeing their market values plunge while investors pulled out cash from commercial funds, forcing many to be suspended.
Construction firms cut back their forecasts for hiring, mirroring moves by British retailers who reported the fastest fall in full-time equivalent employment in two years in the second quarter, as the referendum approached.
But a survey by the British Retail Consortium showed 93 percent of retailers intended to keep staffing levels unchanged in the next three months compared with 83 percent in the second quarter of last year.
A third survey published on Thursday showed pay awards in Britain stuck in a slow gear.
Median pay settlements in the three months to the end of June were worth 1.8 per cent for a third month in a row after a two-year run during which increases of 2 per cent had become the norm, according to XpertHR, an online human resources firm.
"It remains to be seen how the uncertainty around the impact of the Brexit vote will feed through to pay settlements, but we are likely to see pay awards remaining subdued for many months to come," XpertHR's Sheila Attwood said.