UK consumer confidence rises to highest since lockdown, report says

However, car production fell by 45% as the sector continues to suffer due to the Covid-19 pandemic

Consumer spending in Britain has rebounded strongly since the initial shock of the lockdown in April. Getty

British consumer confidence rose in September to its highest level since the coronavirus lockdown started in March, but it remains well below its pre-pandemic levels, a survey showed on Friday.

The GfK Consumer Confidence Barometer rose unexpectedly to -25 in September from -27 in August.

The survey was conducted in the first half of the month, before Tuesday's announcement of new social restrictions to curb a resurgence of the Covid-19 pandemic across the UK.

"Only an unbridled optimist will bet on confidence climbing further," said Joe Staton, client strategy director at GfK, which surveyed 2,000 people in the first two weeks of this month.

Despite subdued confidence, consumer spending in Britain has rebounded strongly since the initial shock of the lockdown in April and retail sales are now higher than before the pandemic.

But the prospect of rising unemployment makes many economists cautious, especially since finance minister Rishi Sunak confirmed on Thursday that support for furloughed workers would be scaled back sharply from November onwards.

Mr Sunak said the government was only willing to continue to subsidise workers whose jobs would be viable in the long-term and that others would need to find new work.

The Recruitment and Employment Confederation said nearly 129,000 job postings were published last week, the highest number since lockdown started.

Meanwhile, the British car production fell by an annual 45 per cent in August as the sector continues to suffer due to the Covid-19 pandemic pushing down demand, an industry body said on Friday.

British factories churned out 51,039 cars last month, leaving output in the first eight months of the year down by nearly 350,000 compared to the same period in 2019, the Society of Motor Manufacturers and Traders (SMMT) said.

"Companies are bracing for a second wave with tighter social and business restrictions making the industry’s attempts to restart even more challenging," said SMMT chief executive Mike Hawes.

Jaguar Land Rover, the UK’s largest carmaker, said it would slash costs by £2.5 billion. Courtesy Jaguar Land Rover

August 2019 had been a stronger-than-normal month as some car makers did not undertake their annual summer shutdowns.

This year, output looks set to fall by around a third to just under 885,000 vehicles, according to SMMT.

The industry, Britain's biggest exporter of goods, is also facing the challenge of tumbling demand for diesel models and handling potential disruption to trade resulting from Brexit.

London and Brussels are trying to negotiate a free trade deal to come into force in January as Britain leaves EU mechanisms such as the single market and customs union.