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Consumer Confidence Recovers After Brexit Hit

Consumer confidence partly recovered this month as Britons chose to carry on spending rather than saving after the Brexit vote.

Market research firm GfK (Swiss: GFK.SW - news) 's headline consumer confidence reading was -7 for August.

That was up from -12 in July when the index saw its sharpest drop in 26 years, following the EU referendum.

The report, coming as separate figures showed an uptick in house price growth , adds to signs that UK households are shrugging off the impact of the referendum vote.

GfK's figures indicated a steep fall in saving as interest rates were cut to a new low by the Bank of England.

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Meanwhile there was a rise in its index of demand for major purchases, such as cars.

Joe Staton, head of market dynamics at GfK, said: "We're reporting some recovery in the index this month as consumers settle into the new wait-and-see reality of a post-Brexit, pre-exit UK."

The improved reading was partly driven by better than expected economic data following the referendum, including July's 1.4% rise in retail sales.

Consumer sentiment was also lifted by the cut in interest rates to 0.25%, low prices and high levels of employment.

Mr Staton said: "We Brits are clearly determined to carry on shopping for today rather than saving for tomorrow."

Separate figures from building society Nationwide (LSE: NBS.L - news) showed house price growth ticked up in August despite a post-Brexit slowdown in the market.

Laith Khalaf, senior analyst at Hargreaves Lansdown (LSE: HL.L - news) stockbrokers, said: "The GfK survey shows us that immediate loss of confidence following the Brexit vote is moderating, as consumers face up to the reality that economic circumstances have not radically transformed overnight.

"Ultimately time will tell if the decision to leave the EU damages the UK economy, and if so to what extent, but so far the signs are relatively encouraging.

"However it's important not to hang too much significance on one or two bits of data, because it's still very early days (Other OTC: UBGXF - news) ."