By Elliot Wright, 7th January 2010
Financial concerns have caused consumer confidence to drop to
its lowest level in over a year, according to research by
Nationwide.
The building society said its consumer confidence index fell by
five points to 69 during December, the biggest slide since November
2008.
The research showed that people are becoming increasingly
concerned about the UK's economic future, with only 34% of people
expecting things to improve over the next six months, down from 41%
in November.
Only 34% of people expect the economy to
improve over the next six months
The recent increase in VAT back to 17.5%, along with other tax
changes announced in the government's Pre-Budget Report such as the
increase in fuel duty, were also likely to blame for the fall in
confidence as people are forced to reassess their expectations.
Overall, the expectations index fell by eight points during the
month, although at 101 it remained well up on the record low of 58
which it fell to in January last year.
A massive 73% of consumers think the economy is bad, while 70%
think that there aren't many jobs available.
Martin Gahbauer, Nationwide's chief economist, said: "The
five-point fall in confidence in December suggests that an element
of caution may have begun to creep back into the minds of consumers
over the Christmas period.
"Although it is still early days, these lower expectations may
foreshadow a more sluggish consumer outlook in 2010 as stimulus
measures are withdrawn."
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