UK consumer morale stuck in depression

Julian Harris
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BRITAIN’S slump in consumer confidence has continued into February, according to a survey commissioned for the European Union, released today.

The GfK NOP index rose by one point compared to January yet, at a score of -28, remains 14 points below where the index stood this time last year.

“Overall confidence remains low and, although it has not reached the depths of two years ago, it is 10 points down on six months ago,” said Nick Moon of GfK NOP Social Research.

The index’s headline figure had floated around the -20 mark for the second half of 2010, yet plummeted to -29 in January.

Consumers in the UK are being squeezed by a combination of low wage growth and rising inflation.

Consumer price index inflation hit four per cent in January -- twice the Bank of England’s target rate – and is tipped to reach five per cent in the early months of this year.

However, there was a positive move in the survey’s recording of personal finance situations.

Respondents indicated a small improvement in personal finances over the past twelve months, and expected improvements over the coming twelve months.

Both measures increased by two points, with the index scores rising to -16 and -10 respectively.

Questioned on whether the current time is a good climate to make major purchases, consumers provided some hope to the British retail sector, delivering a four point uptick in the index.

However, the measure of appetite for major purchases remains low at -25, which is nine points below its level in February last year of -16.

Meanwhile, Britons continue to consider this a bad time to save, with the “savings index” plummeting six points to -11, five points lower than the same time last year.

Confidence in the economic outlook remains notably weak, with the survey reporting a further point drop in the “general economic situation over the next 12 months.”

On this variable the index score fell to -31, considerably below its positive score of plus four points, recorded in February 2010.