LONDON (Reuters) – Britain’s messy election outcome and a weakening of the housing market have caused a sharp of loss of confidence among consumers, leaving the country dependent on exports to avoid a recession, according to a survey published on Tuesday.
An index of consumer confidence produced by polling firm YouGov fell back to just above levels last seen just after last year’s shock referendum decision to leave the European Union.
“Our preliminary assessment is that economic growth will fall sharply over the coming months and the country will only be saved from recession by strong international trade,” said Douglas McWilliams, deputy chairman at the Centre for Economics and Business Research which produces the index with YouGov.
Prime Minister Theresa May’s failure to secure a parliamentary majority in the June 8 election, raising the prospect of a weak government, weighed on consumers who were already feeling the strain of higher inflation and weak wage growth, YouGov said.
“But the real cause for alarm will be the cooling of the property market, as this is one of the key things that has propped up consumer confidence over the past few years,” Stephen Harmston, head of YouGov Reports, said.
YouGov’s conclusions were based on data collected between June 9 and June 21. The online polling company conducts around 6,000 online surveys a month.
Britain’s housing market has come under pressure in recent months. Mortgage lender Nationwide has reported three successive monthly falls in house prices for the first time since 2009, while rival Halifax says annual growth is the lowest since 2013.
Britain’s economy as a whole initially withstood the shock of the Brexit vote but lost much of its momentum in early 2017.
The combination of slow growth and high inflation has put the Bank of England in a difficult spot. Its interest-rate setters split 5-3 this month on the need to raise borrowing costs to see off a rise in inflation. The BoE is waiting to see if exports can offset weaker consumer demand.
There was some more encouraging economic news on Tuesday from jobs website Adzuna. For the past two years it has reported year-on-year declines in available wages. May’s decline of 1.0 percent was the joint-smallest since July 2015.
(Reporting by William Schomberg, editing by David Milliken)