11/05/2012 00:35:00

UK Consumer Confidence Slumps After Budget

LONDON -- U.K. consumer confidence sank in April as financial expectations and plans to make major purchases fell following the heavily criticized government budget, a survey showed Friday.

And, the index could take a further downward turn in May as consumers take on board news that the U.K. economy has returned to recession.

U.K. high street lender Nationwide's monthly consumer confidence index fell 44 in April from 53 in March. All three sub-sectors declined, but the sharpest drop was in the spending index as consumers are increasingly reluctant to make major purchases and as more respondents expect their household income to be lower in six months time.

"The index has consistently remained well below its long‐run average, signalling ongoing caution on the part of U.K. consumers," said Robert Gardner, Nationwide" s chief economist.

"It is not surprising that confidence remains fragile, with the economy shrinking over the past six months and labour market conditions still weak," Gardner said, adding that while easing inflation buoyed confidence earlier in the year, an increase in fuel and food costs more recently has meant concerns over income have begun to return.

The period over which consumers were questioned directly followed the March 21 government budget report, but came before the U.K. economy was confirmed to have returned to recession. So, while many will have had time to digest the budget which unveiled several unpopular policies -- including cutting the higher rate of tax from 50% to 45% and changes to tax rules for pensioners and warm food -- it is possible the index could fall further in May as confirmation of the weak economy and uncertainty surrounding a speedy recovery take hold.

"Looking forward, there are a number of one‐off factors that are likely to impact confidence in the months ahead. News that the U.K. dipped back into recession at the start of the year may further depress sentiment in the near-term," Gardner said.

U.K. gross domestic product shrank 0.2% on the quarter in the first three months of the year. That followed a 0.3% contraction in the fourth quarter of last year and fulfills a widely held calculation of recession -- two consecutive quarters of economic contraction.

Prospects for recovery remain uncertain as the euro zone -- the U.K.'s largest trading partner -- continues to struggle amid the deepening debt crisis and wide ranging austerity measures.

Other details of the survey showed that the consumers' viewed the present situation as worse than in March, while expectations over job prospects were little changed with 56% of respondents saying there will only be a few jobs around in the coming six months compared with 22% who say there will be more opportunity to find a job.

-By Ilona Billington, Dow Jones Newswires, +44 20 7842 9452; ilona.billington@dowjones.com

(END) Dow Jones Newswires

May 10, 2012 19:35 ET (23:35 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

Post comment

Related debate

  • 1 week
  • 1 month
  • 1 Year
18 Apr
VWS
Der har ikke været skrevet meget om hvad det nye MHI Vestas JV vil i Kina. Det har været nævnt kort ..
15
20 Apr
GEN
Jeg er normalt ikke så let irritabel, men nu må det snart være nok. Igennem den sidste måned har j..
14
16 Apr
TOPO
Jeg ser et par forskellige dynamikker udspille sig:   1) Hvad er fusionspartneren, Bioalliance, reel..
14
22 Apr
GEN
Lad nu være med at træde hinanden over tæerne gang på gang i jagten på, hvem som har mest ret. Det e..
11
16 Apr
VWS
Vestas får jo ordrer på 13-14% af alle verden vindmølleprojekter, så alene derfor kan det jo ikke væ..
10
21 Apr
EI
Jeg syntes, at mange af bemærkningerne ovenfor viser, at janteloven stadig er gældende. "Han skal ik..
9
21 Apr
E:BARC
Normal 0 21 false false false NO-BOK X-NONE X-NONE ..
9
18 Apr
VWS
Den overvejelse vil jeg i bedste fald kalde irrelevant. For det første er længder af kyststrækninger..
9
22 Apr
GEN
Hvis GW kun skulle udtale sig om de aktier, han virkelig ejer ville der blive meget tomt på disse si..
8
21 Apr
EI
Kanonkaj - Så skal du da også have et stort til lykke. Jeg kan vel så bare sige at "Det er helt kano..
8

Tech Companies Send Criticism Along With NSA-Related Data -- Update

04/02/2014 00:06:00
By Danny Yadron Technology companies including Google Inc. and Microsoft Corp. released new figures on the amount of data requests they received from U.S. ..

U.S. Hot Stocks: Hot Stocks to Watch

03/02/2014 14:07:00
Among the companies with shares expected to actively trade in Monday's session is Herbalife Ltd. (HLF). Herbalife Ltd. (HLF) raised its fourth-quarter outl..

Pfizer Study Meets Primary Endpoints

03/02/2014 13:05:00
Pfizer Inc. (PFE) said Monday that a Phase 2 trial of its advanced breast cancer treatment met its primary endpoint. Pfizer said a study comparing the effec..

Most read news

  • 24 hours
  • 48 hours
  • 1 week
1
Notice of the Annual General Meeting of EVRY ASA
2
iTalk: Inks M2M Medical Marijuana Distribution Deal
3
Lundin Mining to Release First Quarter 2014 Results Tuesday, April 29, 2014
4
NADL - Filing of Annual Report on Form 20-F
5
AerCap Sells Equity Interest in $750 Million Genesis Funding Limited Aircraft Securitisation Vehicle to Wood Creek
Euroinvestor around the globe: Euroinvestor.dk | Euroinvestor.se | Euroinvestor.no | Euroinvestor.fr | Forexinvestor.com| Wisselkoersen.nl | Valuta.se | Valutaveksel.no | Divisas.es | Valute.it
Copyright Euroinvestor A/S 2014   Disclaimer and Terms of Use
Quote information is delivered by Interactive Data.
Data is delayed 15-20 minutes according to the distribution agreements set by the different exchanges.
 
23 April 2014 10:45:40
(UTC) Dublin, Edinburgh, Lisbon, London
Version: LiveBranchBuild_20140324.1 - EUROWEB7 - 2014-04-23 11:45:40 - 2014-04-23 10:45:40 - 1000 - Website: OKAY