Consumer confidence falls for first time in a year
Consumer confidence has fallen since March according to the latest Consumer Confidence survey, released by Nielsen and the British Retail Consortium (BRC).
The quarterly survey asks consumers how the feel about job prospects, their own personal finances, spending intentions and major concerns. It shows the confidence index fell two points to 78 in the last three months – the first fall since April 2009.
Prior to this latest survey, confidence levels had made a slow, but steady improvement over the previous four quarters.
Concerns over the economy have shot up, with 39 per cent of people citing this as their first or second biggest concern (up from 27 per cent in March). The focus on the country's economic predicament during the election campaign in April and early May is likely to have brought this to the forefront of consumers' minds and driven the increase. The next biggest concerns were debt and job security.
Seventy-one per cent of respondents think their job prospects over the next year will be ‘bad' or ‘not so good'. Over half say the same about their personal finances.
The survey also reveals that 82 per cent of people believe the country is still in recession. While that is down slightly from 84 per cent in March, a much smaller proportion thinks we will be out of recession in a year's time. In March 44 per cent thought Great Britain would not be out of recession within 12 months. That figure has risen to 52 per cent in this survey.
Justin Sargent, Group Managing Director Nielsen Consumer, UK & Ireland, commented:"Our survey tells us that consumers are starting to feel more worried about jobs and money and debt and this is a concerning turn of events. Many economists have talked about a ‘double dip' recession and the results of this survey would suggest we are at a crucial point in the consumer's mind. Hopefully sentiment will stabilise and this will turn out to be a minor fluctuation on our road to recovery.
"Recent employment figures were positive and interest rates remain low which helps people feel more secure but the fact that ‘saving' remains the number one thing consumers say they do with their spare cash indicates that people are making concerted efforts to build themselves some additional security."
Stephen Robertson, British Retail Consortium Director General said: "Pre-election uncertainty has turned into post-election anxiety. Worries about the state of the economy and fears about the direct effect on individuals of austerity measures have halted the revival in customers' mood that had been underway since this time last year.
"British consumer confidence is below the global average, suggesting we're more unsure about future recovery than other countries.
"But, though confidence has fallen recently, it's well up on this time last year and retail sales have proved reasonably resilient. The impending VAT increase will encourage some customers to buy this side of January.
"After that it's hard to predict the true impact of tax rises and spending cuts until they actually hit. For customers, there's a big difference between anticipating pain and actually feeling it."
Other findings from the survey include:
- Sentiment over job prospects has hardly changed over the last three quarters with only 23% believing that job prospects in Great Britain will be excellent or good in the coming year. (3% said ‘good', 20% said ‘excellent').
- There has been a three percentage point jump in the number of people who feel very negatively about their own personal finances. 12% of people now believe their own personal finances will be ‘bad' and a further 42% believe they will be ‘not so good' over the year ahead.
- There has also been an increase in the number of people who believe that now is a ‘bad' time to buy the things they want and need. 16% believed this in Q1 and now 19% think this. A further 46% believe that it is a ‘not so good' time to be spending.
- After the economy (39%), debt (19%), job security (16%), increasing fuel prices (16%) and utility bills (15%) are cited as people's main concerns (total of first and second biggest concern).
- Savings and holidays are the most popular ways that people use their spare cash. But 22% of people said they have no spare cash, up from 19% in Q1.
- The most heavily cited strategies that consumers are using to stay in budget fall into two groups – firstly people are trying to spend less on everyday essentials (e.g. try to save on gas & electricity (63%), switch to cheaper grocery brands (62%), spend less on new clothes (62%). (NB this is taken from a sub-sample of the 63% of respondents who said they had changed the way they spend in order to stay in budget.)
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