UK consumer confidence slumps again
SQUEEZED household incomes prompted a sharp drop in consumer confidence in June, while appetite to take on debt remains weak according to separate data released by the Bank of England yesterday.
After an uptick in morale from extra bank holidays in April and May, the GfK NOP consumer confidence index slipped back to -25, with falls in all five elements of the survey.
“Across the board, confidence is lower than it was this time last year,” said GfK NOP chief Nick Moon.
Net consumer credit came in weaker than expected yesterday, rising by just £0.2bn in May – half the average monthly increase over the past six months..
Borrowing on plastic “remained broadly unchanged”, the Bank of England report said.
“The spectre of falling real wages and high unemployment is putting households under immense pressure and they are choosing to cut back, rather than attempting to subsidise their spending through credit,” said Nida Ali, economic adviser to the Ernst & Young Item Club.
Mortgage approvals in May came in at 45,940 – slightly up from April, yet still just below the six-month average of 45,957.
“Households remain heavily indebted while consumer confidence is weak and in this uncertain economic climate, individuals are wary of committing to big decisions like buying a house,” Ali added.
Total net lending on mortgages surprised to the upside, however, printing £1.1bn – above the six month average of £0.8bn.
Separate figures on broad money were subdued, with the monthly growth in M4 unchanged at 0.1 per cent in May (the same as the previous two months). Broad money excluding intermediate other financial firms, however, was up by £5.2bn in May.