UK consumer confidence is high, but…

Against my better judgement, I’m venturing into uncertain waters: since GDP data comes out several weeks after the fact and is regularly revised, I thought it would be interesting to see what the “pandemic fundamentals” are telling us about the state of the UK economy. It’s particularly hazardous to be doing this right now, in the midst of supply chain disruptions, worker shortages, and the end to the furlough scheme and universal credit uplift. Nevertheless, nothing wrong with having a look at the data as long as we remember that:

“It is difficult to make predictions, especially about the future.”

[The saying is most often attributed to the Danish physicist Niels Bohr.]

Since these one-page #dataisbeautiful charts seem quite a nice way of taking a snaphot of the economy, I’ve made one for the UK, comparing it to the EU and other OECD countries. In the chart, UK is shown in a bright navy blue colour, EU in a cyan blue colour, and the rest of OECD in a black colour.

Here’s what emerges:

1. The number of COVID-19 cases over the summer has been significantly higher in the UK than in the EU and other OECD countries
2. However, the number of deaths per million people in the population has only been slightly higher than in the EU, and lower than the rest of OECD
3. This seems to have been driven by the very high vaccination rates in the UK, even though these seem to be plateauing somewhat*
4. The successful vaccination programme has allowed the government to reduce social distancing rules faster than other countries
5. Unlike some other countries in the sample, economic support by government has remained at a very high level until now
6. The combination of higher vaccinations, lower restrictions and higher economic support has translated into higher consumer confidence
7. However, while business confidence has increased, it hasn’t bounced back nearly as much, and has recently declined somewhat
8. This is due to numerous factors (e.g., supply chain issues), but possibly also still-subdued actual spending by consumers**

* Some of this is to be expected, given that children under 12 make up 14% and children between 12 and 17 make up 7% of the UK population.
** This is pure speculation. I haven’t had time to look further into business confidence metrics — probably something I should do next!

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