By Wiktor Szary
LONDON--U.K. consumer confidence improved slightly in December but remained close to the level seen in the immediate aftermath of the June 23 vote to leave the European Union, a survey published in the U.K. on Thursday showed.
The long-running barometer of consumer confidence, conducted by market researchers GfK U.K. Ltd. for the European Union's executive, ticked up by 1 point in December, following a 5-point decline the previous month, and stood at minus 7. Economists polled by The Wall Street Journal had expected the index to decline further by 1 point.
British consumers "remain relatively confident about their personal financial situation," GfK Head of Market Dynamics Joe Staton said, but "confidence in the general economic situation...has collapsed in the face of uncertainty about the future both at home and abroad."
Whether British consumers carry on shopping will be critical to how well the economy performs in the months and years ahead as the U.K. charts its departure from the European bloc. Prime Minister Theresa May has signaled that she intends to launch the divorce proceedings, which are expected to last at least two years, in early 2017.
Economists warn that accelerating inflation combined with limited wage growth is likely to curb Britons' willingness to spend, hurting the U.K.'s growth prospects. Consumer prices grew at the fastest pace in two years in November, and inflation is widely expected to speed up further following the pound's steep plunge in the wake of the referendum.
"Looking ahead to 2017, against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress...of the year to come," Mr. Staton said.
U.K. shoppers seemed largely unfazed by the prospect of Britain's exit from the European Union in the wake of the June referendum, with sales growing strongly over the summer and hitting a 14-year annual high in October.
But growth in retail sales slowed visibly in November, official data showed earlier this month, as soaring fuel prices curbed consumer spending. Official data for December will not be available until the start of 2017.
Also Thursday, a separate survey by the Confederation of British Industry, a business lobby group, showed that while the balance of firms reporting a rise in output reached the highest level in a year in the three months to December, growth in the retail sector slowed.
Write to Wiktor Szary at Wiktor.Szary@wsj.com
(END) Dow Jones Newswires
December 21, 2016 19:15 ET (00:15 GMT)
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