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We just got a major sign that the Bank of England's post-Brexit contingency plan is working

Aug 31, 2016, 15:43 IST

Mark Carney, the Governor of the Bank of England, speaks during a press conference as he presents the quarterly inflation report at the Bank of England in the City of London, on May 13, 2015.Matt Dunham - WPA Pool/Getty Images

Confidence among British shoppers improved dramatically in August, as Britons decided to carry on spending rather than saving in the wake of the Brexit result.

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GfK's consumer confidence reading, based on a survey of 2000 Britons, was -7 for August, up from -12 in July.

The findings come after the Bank of England slashed interest rates from 0.5% to 0.25% on 4 August, the lowest level in the Bank of England's history.

The Bank's move was designed to encourage high-street spending and cheap borrowing, and was widely seen as a positive move to protect households and businesses from a looming recession.

It looks like it has had an immediate impact, with consumers in the survey mentioning improvements to their personal finances, and to the wider economy as reasons for their increased optimism.

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As well as low interest rates, GfK's Head of Market Dynamics, Joe Staton said the uptick in confidence was due to good news from economic data, falling prices, and high levels of employment.

There have been other indications of shoppers returning to their pre-Brexit habits, too. A YouGov survey last week recorded a massive bounce in consumer confidence, and the ONS found that retail sales rose by 1.4% in July after a drop in June.

The recovery comes as Britons settle into "the new wait-and-see reality of a post-Brexit, pre-exit UK," Staton said.

The good news for borrowers and spenders is bad news for savers, though.

GfK's Savings Index collapsed this month from +1 to -15, as the low interest rates meant that savers had little motivation to hold onto their money.

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

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