LONDON (Reuters) - The confusing outlook for Britain’s economy, reflected in a jumble of statements by Bank of England policymakers over the past couple of weeks, is summed up well by the latest surveys from GfK and the European Commission.
Britain’s main gauge of consumer confidence slid to an 11-month low in the face of rising inflation since last year’s Brexit vote and weakening wage growth, market research firm GfK said on Friday.
Given workers’ pay is now rising more slowly than inflation, consumer confidence could drop further.
As this chart shows, the GfK’s gauge of personal finances, one of the five components that feeds into the main consumer confidence index, is closely correlated with real earnings.
And Friday’s official data highlighted the weakness of the British consumer in the first three months of the year.
While some Bank of England officials expect stronger investment and exports will soon compensate for this, European Commission business surveys published on Thursday suggest the consumer slowdown is broadening through the economy.
Confidence in the services industry, which accounts for 79 percent of economic output, has fallen to its weakest since 2013, as this chart shows:
And retailers are also feeling the hit. The balance of shop chains expecting to raise prices in the next three months is now nearing record levels.
Next week’s batch of Markit/CIPS business surveys, which are watched closely by the BoE, could make or break expectations that the next interest rate decision in August will be a close-run affair.
Editing by Jeremy Gaunt.