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U.K. Consumers Are ‘Treading Water’ as Brexit Approaches Climax

Andrew Atkinson

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U.K. consumer confidence held up better than expected this month amid fresh turmoil over Brexit, according to a survey published Friday.

GfK said its key index, which hit levels in August that were last lower six years ago, rose by 2 points to minus 12 as households declared themselves modestly less pessimistic.

The survey was carried out in the first two weeks of September, a period of heightened political drama that saw lawmakers pass legislation designed to stop a no-deal Brexit and Prime Minister Boris Johnson suspend Parliament, vowing to take Britain out of the European Union at the end of next month.

Johnson’s strategy was thrown into disarray this week when the highest court in the land ruled the decision unlawful. Parliament was ordered back to work and lawmakers opposed to a no-deal Brexit are now trying to make sure the prime minister abides by the new legislation, which would force him to seek an extension of EU membership if no exit deal is agreed.

“British consumers appear to be treading water during this wait-and-see run-up to Oct. 31,” said Joe Staton, client strategy director at GfK. “You can almost sense people are keeping their fingers crossed.”

A separate report Friday revealed a worrying lack of preparedness among small firms. Of those expecting to be harmed by a no-deal Brexit, only a fifth have taken any action to mitigate the potential impact, costing them 2,000 pounds ($2,470) on average, according to the Federation of Small Businesses.

With many also being hit by a volatile pound, the lobby group called on the government to deliver “desperately needed” financial support by cutting the tax burden on businesses.

Meanwhile, Johnson’s tax-cutting plans came under renewed attack from the Institute for Fiscal Studies, which described them as “risky” given the uncertain economic outlook and the big public-spending boost promised earlier this month.

The proposals, which include increasing the higher-rate tax threshold to 80,000 pounds and raising the point at which people start paying National Insurance Contributions, could cost 20 billion pounds and mainly benefit those on high incomes, the IFS said in an analysis due to be published in its Green Budget.

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint, David Goodman

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