FEARS among consumers of imminent government measures to slash public spending have intensified, prompting confidence to plummet last month and wiping out the gain seen in August, the Nationwide September survey will say today.
The headline confidence index slumped nine points to 53, its weakest in more than a year and well below its long-term average of 83. More worryingly, confidence in spending took a sizeable knock last month, with the spending index at its lowest since November 2008 at the height of the financial crisis.
Martin Gahbauer, chief economist at Nationwide, said: “It would seem that the pessimistic sentiments of a few months ago have been renewed and this has perhaps been driven by a realisation of the true impact of the cuts announced in the emergency Budget. The government’s impending spending review is likely to have a strong influence on consumer confidence in the coming weeks.”
The expectations index fell by 12 points during September to 73 and reversed the previous increase in sentiment. This index has now fallen by 47 points since February.
Gahbauer said it would need a significant shift in sentiment to reverse this downward trend.
However, consumers expressed a guarded optimism towards the housing market in September, with a very marginal improvement in sentiment. They now expect the value of their home to increase by 0.1 per cent over the next six months.