| CATEGORY: NEWS AND ANNOUNCEMENTS |
Fri 30 Jul 2010
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LONDON (SHARECAST) - Fragile UK consumer confidence waned further in July, raising the prospect that the UK economy might experience a double-dip recession after all.
The GfK NOP index of consumer sentiment eased to -22 from -19 in June, its lowest level in 11 months and the fifth month in a row that it has shown a decline.
Economists were braced for a fall in the index but the consensus was for a gentler decline to -20.
"Given that consumer confidence measures are normally good predictors of what the economy itself will do a few months later, the continuing slide in the index makes a double-dip recession look more of a possibility as each month goes by,” claimed Nick Moon, managing director at GfK.
Moon suggested that respondents to the survey were already taking into account the “likely recessionary impact of the government’s announcement about spending cuts.”
The GfK NOP index showed an alarming slide in confidence in the "general economic situation" over the next 12 months, to -25 from -12 in June. Consumer confidence about personal finances moved down four notches to -6 from -2 in June.
The one bright spot was the reading on the “climate for major purchases” index which, while it remained in negative territory, at least improved from -24 in June to -16.
Moon suggested that the improving trend may have been triggered by the announcement of the rise in VAT announced in the May Budget. The increase is set to come in to effect on 3 January and consumers may be buying big ticket items now to avoid paying the extra tax.
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