Gloomy outlook darkens consumers’ mood
Consumer confidence fell to its lowest level for a year in June, according to Nationwide, with public sector cuts and tax rises expected to lead to further falls in the coming months.
The building society’s consumer confidence index dropped to 63 in June from 66 in May.
Its spending index, which measures shoppers’ appetite for buying household goods and big ticket items, dipped to 95 from 90 in May, the lowest score since January 2009.
The survey does not take account the period following Chancellor George Osborne’s budget on June 22, which contained a number of austerity measures including public sector cuts and a planned rise in VAT.
According to Nationwide’s chief economist Martin Gahbauer, consumers’ mood could darken further when the budget measures sink in.
The recent dip in consumer confidence mirrors the increasingly pessimistic outlook of senior marketers found by Bellwether in its survey of budgets and attitudes. The study also found that marketing budgets were revised downwards in quarter two.
The gloomy forecasts come amid fears that the recovery in the UK economy is also faltering.
Financial think-tank the National Institute for Economic and Social Research said last week that quarter on quarter growth slowed to 0.7% in the three months to June, from 0.9% at the start of the year.
