Consumer confidence in the UK improves as fears of Brexit start to subside

Consumer confidence in the United Kingdom improved during the month of August, as fears from the Brexit vote have started to subside. Also, English shoppers have geared up for spending, shrugging off savings, in an environment of low interest rates, according to a recently released private survey.

The UK consumer confidence index improved five points to -7 in August after plunging to -12 in July, data released by market research firm GfK showed Tuesday. A median estimate of market participants had forecasted an improvement to -8. A reading below zero indicates pessimism.

Confidence among British consumers plunged in July at the sharpest rate in nearly 22 years following the UK’s historic decision to leave the European Union. The confidence index fell by eight points following the vote, the biggest drop since the housing crash of 1994.

"We are reporting some recovery in the Index this month as consumers settle into the new wait-and-see reality of a post-Brexit, pre-exit UK," said Joe Staton, Head, Market Dynamics, GFK.

Further, the survey indicated a sharp improvement across all measures, including the economic outlook and major purchase indexes. However, the savings index declined sharply, pointing to a large increase in consumer spending during August.

Meanwhile, the economy is throwing signs of optimism after the historic Brexit referendum that took place on June 23, with the rate of unemployment declining in the UK amid signs of a rise in consumer spending. In addition, a competitive pound has been one of the main catalysts behind the growth, with tourists flooding into the UK from the United States and neighboring Asian economies.