In a resurgence of the ‘Dunkirk spirit’ of fifty-one years ago, the British public continues to ignore evidence of a global slowdown and concomitant job losses.
According to the European Commission’s June survey of consumer confidence, Britons are cheerier today about their personal financial prospects than at any time since the early 1980s. Thirty-two per cent expect their household's financial position to improve over the next twelve months, while only 13% believe it will deteriorate.
As if to underscore this quixotic mindset, public confidence in the nation’s economic outlook had also risen – confounding the prognostications of UK economic pundits.
The news was greeted with opposing responses by the retail and manufacturing sectors. The former saw it as a justification for its first sustained price rises since early 1999; the latter was downbeat at the adverse effect the news could have on further interest rate cuts.
GfK, which carried out the study for the EC, attributed consumers' positive outlook partly to Labour’s landslide victory in the May general election, mirroring the euphoria in 1997 when the party won its first election in eighteen years.
Opined an entrail-raker at ING Charterhouse Securities: “This degree of confidence is not surprising. The proportion of people of working age in work is the highest in our history, earnings growth has accelerated, inflation is still very low, people are looking forward to the effect of lower interest rates on their budgets coming through, and taxes have been cut. It's quite evident people have never had it so good within living memory."
However, a Deutsche Bank seer warned that consumer buoyancy could swiftly be deflated if the fall in unemployment is reversed. He cited the Recruitment & Employment Confederation index of newspaper job advertisements, seen as a reliable indicator of employment trends. This had fallen sharply since the beginning of the year.
News source: Financial Times