U.K. Consumers, Firms End 2019 on Upbeat Note as Sentiment Jumps

(Bloomberg) -- Confidence among U.K. businesses and consumers climbed in December, even before Boris Johnson’s decisive election victory brought some certainty to the Brexit process.

GfK said Friday that its index of consumer sentiment increased by three points to reach the highest level since July, with the jump led by improving expectations for the economy in 2020. Meanwhile, a measure of business confidence from Lloyds hit a five-month high as companies’ assessment of the net impact of Brexit on their prospects reached the least negative since January.

Both surveys were carried out before the result of the Dec. 12 election, which saw Johnson win a clear majority that all but guarantees the U.K. will leave the European Union by Jan. 31. Despite the improvement this month, both measures remain below their historical averages, and the nation’s future remains uncertain, with the focus now on reaching a trade deal by the end of 2020.

The Bank of England said Thursday that it is too early to tell whether the clearer path out of the EU will improve sentiment. Britain could yet experience a disruptive split after Johnson said he’d make it illegal to extend the transition period beyond the end of next year, even if no trade deal is agreed by then.

The BOE also noted that the labor market might be loosening, a fact borne out by a separate report by the Recruitment and Employment Confederation which showed hiring confidence at the lowest levels recorded since the survey started in 2016.

©2019 Bloomberg L.P.

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