Special Report: Consumer confidence defies gloomy Brexit predictions

Special Report: Consumer confidence defies gloomy Brexit predictions

Confidence in the UK economy has soared from a pre-Brexit referendum low, with more than one in two consumers still planning a holiday abroad in the next 12 months.

That is the conclusion of the latest Holiday Confidence Index from First Rate Exchange Services which found a 14-point rise in confidence in the economy compared with its last survey in April.

The index is based on an online survey of more than 5,000 UK adults, whose responses on their intention to take a holiday, frequency and duration of holiday and spending plans are combined to produce an overall confidencerating Index.

The survey found a two-point fall year on year to 53% in the proportion planning an overseas holiday, but the figure remains high.

The overall index for winter 2016 is down just one point on 12 months ago and, while two of the six indices – on holiday intention and frequency – were down, all three on holiday spending rose, leading First Rate to conclude: “Consumers appear far more bullish about the UK economy [than might be expected].”

Liam Hodge, head of insight at First Rate Exchange Services, said the results “came as a bit of a surprise”. He said: “There was a sharp dip [in confidence] immediately after the referendum, but by September people appear much more confident.”

First Rate identified “a huge rise” in those expecting the UK economy to improve over the next year since its pre-referendum survey in April when only 19% of respondents believed the economy would improve.

In September, 33% expressed confidence the economy will improve – four points up on September 2015. Confidence among those planning an overseas holiday was higher, with 70% confident of meeting their financial commitments and 81% of those who travelled aboard in the past 12 months intending to go away again in the coming year.

First Rate noted “a marked increase in the numbers allocating more money to their holiday and a significant fall in the volume of people expecting to spend the same as a year ago”. It added: “Those planning trips abroad are realistic about the money they will need to spend. More are increasing their budgets.”

It suggested the “cautious approach” of consumers “is reflected in a hardening of opinions about the importance of holiday protection”, with 75% of holidaymakers identifying Atol protection as a priority – the highest level yet and up from 71% a year earlier.

Almost 60% of those planning an overseas holiday intend to take more than one, and there was a two-point rise year on year to 42% in the proportion saying they would reduce spending in other areas to afford a holiday abroad.

On a negative note, among those intending to take a holiday, there was a six-point fall to 51% in the proportion who agreed “overseas holidays represent good value for money”.

The survey found seven out of 10 holidaymakers plan to visit Europe in the next year and almost one in 10 North America, despite the fall in sterling.

Hodge said: “It’s very difficult to predict what will happen to the market. But there are lots of positives here. People are still looking to take a holiday, and expecting to spend more on the holiday and more while they are away.”

YouGov surveyed 5,067 UK adults online in September for First Rate.

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