THE first three months of 2012 saw economic confidence among UK consumers grow, and last month we saw the YouGov HEAT (Household Economic Activity Tracker) at its highest level since June 2010.
In March the index was up 10 points compared to December – was positive momentum building?
Today sees the release of the interim numbers for April, and I’m afraid that any positive momentum has stalled. The HEAT Index score dropped from 98 out of 200 in March to 94 now. This is still higher than any other month since June 2010, but it is disappointing that we have not continued to head in the right direction.
The drop in the score is down to a fall in all of the measures that go into it (household activity, job security, house price perception and business activity) but looking behind those scores, the real driver can be seen elsewhere.
These economic confidence numbers are the first that we have seen since the Budget, and our question on confidence in the government’s handling of the economy has dropped from 68 to 55, the lowest score under the coalition.
This backs up findings we see in our political polling – that the Budget was poorly perceived, confidence in the government is falling and Labour is opening up a big lead in voting intention (11 points in YouGov’s daily poll yesterday).
The political aspect will be disturbing enough for the government, but if it is also affecting the fragile state of economic confidence they could be in a dangerous vicious circle, with consumers’ lack of confidence in the government harming their willingness to spend, thereby stalling the economic recovery.
This could, in turn, inevitably lead to further falls in perceptions of how our leaders are handling it.
There is hope for Osborne and co: although confidence has fallen, it is still higher than it had been for some time prior to March. The concern is the impact that government policy has had on it.
The chancellor will need those policies to work and work quickly or there could be trouble ahead.
Stephan Shakespeare is the chief executive of YouGov