Consumer confidence drops dramatically

Joint research from the Nielsen Company and the British Retail said its British consumer confidence index fell sharply against a global backdrop of growing optimism.

The survey revealed that fears about job prospects drove down confidence levels in Britain and also suggested that Britain was becoming a nation of savers despite the low interest rates.

Nearly one third of those polled cited the economy as a major concern with fuel prices continuing to worry Britons as either their first or second concern. Some 85% of British participants in the survey believed that the UK was still in recession.

Chris Morley, group managing director of Nielson UK and Ireland, said: “The long hard winter and continuous media coverage of UK debt levels and cuts in the public sector are all taking their toll on consumer confidence in the UK. I would envisage a continuation of lower confidence as consumers are still being very cautious in their spending intentions.”

Stephen Robertson, director at the British Retail Consortium, added: “Nearly a third of people now say they have no spare money because households are suffering a squeeze between high inflation and low wage growth. In real terms, disposable incomes have fallen for the first time in 30 years.

“With inflation expected to rise further and average earnings showing only minimal growth, disposable incomes will be under continuing pressure for the rest of the year and beyond.

“The prospect of interest rates beginning to rise as the housing market weakens can only dent consumer confidence further over the coming months.”