Consumer confidence at near-record low, says Deloitte

Consumer confidence graph
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The final quarter of 2020 saw consumer confidence in Scotland fall by a further two percentage points, to -18%, as the country headed into the New Year under fresh lockdown restrictions, according to the latest Deloitte Consumer Tracker.

Apart from personal finances, all other measures of confidence were below year-on-year comparisons, with ‘health and wellbeing’ and ‘children’s education and welfare’ categories reaching historic lows.

Deloitte’s analysis is based on a nationally representative sample of more than 3,000 UK consumers, (295 from Scotland) between 1 and 4 January 2021, after a Brexit deal had been reached, and as a third national lockdown was announced.

The emergence of a more virulent strain of Covid-19 saw Scottish confidence around health and wellbeing fall 11 percentage points in Q4 2020, the lowest level ever recorded at -39%. Coupled with school and nursery closures in the New Year, confidence in children’s education and welfare also reached a record low, falling six percentage points to -20%.

Across the UK, the extension of some major government and private sector income-support measures, such as the furlough scheme and payment holidays on loans, mortgages and credit cards, boosted confidence in personal finances, improving sentiment in the fourth quarter. In Scotland overall sentiment on levels of household disposable income rose to -12%, showing consumers are slightly more positive than across the rest of the UK, where sentiment sits at -17%. In Scotland, this has improved by five percentage points compared to the same time last year, prior to the Covid-19 outbreak.

With many UK consumers working from home, free of commuting costs and unable to spend on holidays or socialising, 31% of respondents said their savings had increased in 2020 with millennials leading the way (35%). By contrast, 29% of consumers said their savings had decreased over the same period, with 30% of Gen-X and 30% of baby boomers each falling into this category.

Ian Stewart, Chief Economist at Deloitte, commented: “High levels of savings combined with confidence in household disposable income point to favourable conditions for supporting growth in consumer activity when the recovery comes. The easing of lockdown restrictions, coupled with vaccines being more widely rolled out and strong personal finances, should unleash pent-up demand to spend.”

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