Consumer confidence slumps

Consumer confidence is at the lowest since January 2009 over fears about the impact of public sector cuts, according to the Nationwide.

The building society’s consumer confidence indicator fell to 56 in July from 63 in June.

The survey was carried out from 21 June to 18 July, taking in the period after Chancellor George Osborne’s austerity budget on 22 June.

Osborne announced spending cuts of at least 25% for most departments, which could lead to heavy job losses in the public sector.

Martin Gahbauer, chief economist at the building society, says there is growing concern among consumers about their disposable income.

“July will have been a time for many consumers to reassess their individual circumstances following the chancellor’s emergency budget, and inflationary pressures, such as rising food and fuel costs, may now be leading to more negative sentiment,” he says.

The Nationwide’s confidence measure has been falling since February’s two-year high of 84.

Some observers fear that the fragile nature of the UK’s economic recovery could lead to a double-dip recession.

Later today (11 August), the Bank of England is expected to lower its growth forecast for the UK economy in 2011.

The change will reflect the decision to increase VAT to 20% next year.

Fears over job security were cited by the British Retail Consortium yesterday (10 August) for “poor” non-food sales in July.

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