‘Double-dip’ recession likely as consumer confidence fallsPosted on: 30 July 2010 by Editor at Large
A ‘double-dip’ recession now seems more likely as consumer confidence fell for the fifth month in a row. Despite earlier press reports of an increase in high street spending, it now seems likely that this was a spate of ‘panic buying’ ahead of January 2011’s VAT increase.
The GfK NOP Consumer Confidence Index dropped by three points this month to -22. That’s the fifth month in a row that confidence has fallen.
The UK Consumer Confidence Survey, which has been running since 1974, is conducted amongst a sample of individuals aged 16+ on behalf of the European Commission. Quotas are imposed on age, sex, region and social class to ensure the final sample is representative of the UK population.
The respondents are asked a series of questions on their personal financial situation and where they see the wider economy going in the months ahead. The overall responses are then used to work out the measure of consumer confidence, or rather the lack of confidence.
Nick Moon, MD of GfK NOP Social Research, comments: "The continuing slide in the Index makes a double dip recession look more of a possibility as each month goes by. It’s possible that respondents are already factoring into their view of the economy over the next 12 months the likely recessionary impact of the government’s announcement about the level of spending cuts it wishes to make. But if they are not then the prognosis is even more gloomy.”
"The one part of the Index to buck the trend was whether now is a good time for major purchases, which rose by eight points this month. This might be people thinking they should buy now before VAT goes up, or might reflect a view that the poor economic conditions mean there are bargains to be had. It should also be noted that this item was the equal biggest faller on last month’s index, so this may be in part a correction."
Find more details on the GfK NOP Consumer Confidence Index.
Meanwhile, as our own spending is curtailed, the public will be able to veto council tax increases in England from 2012.
Communities Secretary Eric Pickles wants to give communities the "final say" on their council tax bills by voting in referendums.
Critics claim that the proposal is to hide the fact that local council services will be damaged by cuts in public spending.
The government claims that the proposal will devolve power away from councils to the ordinary council tax payers.
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