UK consumers remain in frugal mood

01 September 2010

LONDON: Consumer confidence is rising in the UK but shoppers remain unwilling to make major purchases, a survey has suggested.

Research firm GfK NOP polled 2,000 adults, with its overall barometer standing at –18 points in August, an improvement of four points month-on-month, and of seven points year-on-year.

But consumer sentiment has worsened markedly since the first quarter, meaning the latest rise only cancelled out an equivalent decrease in July, after austerity measures to cut the UK's national debt were announced.

"Consumer confidence has been in constant decline for the last five months and a further fall would have made a double-dip recession seem a very real prospect," said Nick Moon, managing director of GfK NOP Social Research.

"The government will undoubtedly read these figures with a great deal of relief."

When assessing their personal financial situation during the 12 months to August 2010, participants delivered an output of -12 points, compared with –18 points from August 2009.

Looking forward, respondents pegged this total at –3 points regarding the coming year, against a score of –6 points in July 2010.

Ratings for the general fiscal environment in the last 12 months came in at –43 points, moderating to –14 points concerning expectations about the year ahead.

"The single biggest improvement has been in confidence in the economy over the next 12 months and this looks particularly encouraging on first sight," said Moon.

"However, this gain merely reverses a similarly large drop in July, and in reality confidence in the economy's future prospects remains below its June level and similar to May 2009 when we were still in the grips of a recession."

The climate for major purchases stood at –20 points in August 2010, a four point contraction on July, but bettering the corresponding tally of –25 points posted in August 2009.

In judging whether "now is a good time to save", the index registered –6 points, up four points on an annual basis.

Data sourced from GfK NOP; additional content by Warc staff