BLBG: U.K. Consumer Confidence Falls to 19-Month Low, Nationwide Says
U.K. consumer confidence fell to a 19-month low in October as Britons braced themselves for the deepest budget cuts since World War II, Nationwide Building Society said.
The index of sentiment slipped 1 point from September to 52, the lowest since March 2009, the customer-owned lender said in an e-mailed statement today. The measure of consumers’ future expectations fell 4 points to 70, also a 19-month low. TNS-RI questioned 1,000 people for Nationwide from Sept. 20 to Oct. 17.
“Consumers displayed greater pessimism towards their future level of household income,” Martin Gahbauer, chief economist at Swindon, England-based Nationwide, said in the statement. “The underlying anxiety around the strength and direction of the recovery appears to remain.”
The survey predates Chancellor of the Exchequer George Osborne’s Oct. 20 announcement detailing the government budget squeeze that will eliminate almost half a million public-sector jobs. Bank of England Governor Mervyn King said this week that the economic recovery will weather the cuts, though its strength remains “highly uncertain.”
Some measures of confidence increased last month. An index of people’s current perception of the economy rose 3 points to 25, while a gauge of whether now is a good time to spend rose 6 points to 92, the report showed. GfK NOP Ltd.’s consumer- confidence index also rose in October before Osborne’s announcement, according to an Oct. 29 report.
The improvements in perception and spending sentiment “should not be overstated,” Gahbauer said. The drop in the expectations gauge “may be due to consumers understanding that changes announced in the spending review will be implemented over several years rather than take effect straight away.”
The Bank of England said this week that consumer spending “may have weakened slightly” in the third quarter and it noted that household sentiment has also declined this year.
A separate report today by research company Acadametrics Ltd. and LSL Property Services Plc said that U.K. house prices rose 0.3 percent to the highest level in more than two years in October as transactions increased and the property market showed signs of peaking.
To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.
To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net
