Message from French households: no future

For French households, the future has darkened during the last two months. The household confidence index plummeted in December and households’ perception of their own situation or that of all French people is at a very low level, not necessarily very different from that observed during the post-Lehman shock period. 2008/2009.
This is a measure of the feeling of what is happening in France today. The difference is that in 2008/2009 the shock was external and in a way it was enough to wait for the effects to fade.
Today the shock is endogenous, it has its source in the very dynamics of French society. When we look at the year-on-year change in the household confidence index, we can see that the shock is stronger than in the winter of 1995 when the French economy froze.
The consequence is that households can no longer project themselves into the future. The perception of their own situation is very degraded leading to a more wait-and-see attitude, leading to a deterioration of the economic situation, feeding a vicious circle.
To get out of it, the government must propose measures in rupture that could change very quickly everyone’s perspective to avoid dramatic political excesses. It is he who has the responsibility and it is certainly not by accentuating the tax burden that the solution will be found.

United Kingdom (confidence), Japan (production) France (consumption)

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Rebound of the UK consumer confidence index in August

After the referendum on Brexit, June the 23rd, households were worried by the consequences of the “Leave” option. They thought that the impact would rapidly be negative. The consumer confidence index dropped deeply in July. It was driven by the uncertainty related to the 12 month outlook for the economy.

Since the referendum, no negative impact was perceived. Continue reading

British households are not happy

After a vote, people are generally happy with the result. That’s what we see in France after a presidential election. With a new president there is a new situation and a majority of people think it will be better in the future. That seems logical and easy to understand.
British are different. They have just voted for a major change in their institutional framework as they want to exit from the European Union. We can expect that a majority of British people will be happy with that.
This is not the case. In July, the households’ confidence index drops deeply by 8 points (deepest drop). Clearly there is no enthusiasm for this fracture.
More than that, expectations on the economic activity for the next 12 months is trending downward dramatically. There is a risk of self prophecy for a recession. The message was that a Brexit could lead to a recession (see economists). The Brexit has been voted and people are worried by this perspective. They will adopt a lower profile for their expenditures because of the uncertainty created by the risk of recession; they prefer to save. But as demand addressed to companies will be lower, the probability of a recession is high.
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