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Confidence in UK slips further

Confidence in UK slips further

Category: Money

Updated: 15/11/2010
First Published: 12/11/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Consumer confidence slipped to its lowest level in more than a year in October, reflecting the worries millions of Britons have over the future of the UK economy.

The Nationwide Consumer Confidence Index fell by one point in the month, the fifth decline in just six months.

The index now sits at its lowest level since March 2009 and 32 points below February 2010's interim peak of 84.

The Expectations Index, which measures the future outlook, was the main reason for the October figure, falling by four points to 70.

In September the index fell by nine points, influenced in part by consumer anxiety over the looming Spending Review, which was announced by the Government on October 20.

"There was little change to overall confidence during October, which may have been a result of consumers waiting to see what the Government's Spending Review would bring," commented Martin Gahbauer, Nationwide's chief economist.

"We saw a significant drop in confidence the previous month, and the underlying anxiety around the strength and direction of the recovery appears to remain."

However, with the onset of the Christmas season, there were some positive signs; with the Spending Index recovering some of the 14 points lost in September, with an increase of six points to 92.

"The main driver behind this rise was greater optimism towards making a major purchase such as a house or car. Improved sentiment towards spending mirrors the news that has been coming from retailers as high street sales continue to grow in the second half of this year.

"Nevertheless, this should not be overstated as levels of optimism here remain low compared to historical figures and still well below their long-run averages."

"The onset of the Christmas period and the imminent VAT hike in the New Year are both likely to influence this measure going forward," said Mr Gahbauer.

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