UK consumers remain sunk in gloom about both their personal finances and the economic outlook, a key barometer published today showed.
The GfK NOP consumer confidence index fell in April, after holding steady in February and March, as fears over household finances and the affordability of major purchases increased. The fall, to -31 from -28 in March, takes the index below a crucial low of -30.
This has been seen only in two previous financial crises, in mid-2008 and early 1990, GfK NOP managing director Nick Moon said.
“This is a significant drop,” he said. “It suggests that the attempts to spur growth in last month’s Budget have failed to convince the public, and this may well be sorely felt on the already beleaguered high street.”
Consumer spending accounts for about 65 per cent of GDP, so any damage to confidence could affect growth.
“It certainly reinforces concerns about consumers being very cautious in their spending going forward,” said Howard Archer, chief UK economist at IHS Global Insight.
The index stood at -16 last April and stayed around -20 in the second-half of 2010. In January it fell to -29 and has stuck just above -30 until now.
Confidence in personal finances saw the greatest monthly drop in
April as consumers’ views of household funds over the past year and in the future both slumped by four points.
Consumers’ views of the economy over the past year fell two points, while expectations for the year ahead lost one point.
FAST FACTS | CONSUMER MORALE
Consumer confidence index at lowest level since mid-2008, when the UK was in recession.
All five measures of confidence fell in April.
Consumer spending accounts for 65 per cent of GDP, and damage to confidence could hit growth.