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Consumer Confidence In Uk Economy Plummets

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http://news.sky.com/skynews/Home/Business/UK-Economy-Consumer-Confidence-Collapses-As-Fear-Spreads-For-Future-Growth/Article/201101415915144?lpos=Business_Top_Stories_Header_3&lid=ARTICLE_15915144_UK_Economy%3A_Consumer_Confidence_Collapses_As_Fear_Spreads_For_Future_Growth

Consumer confidence took its biggest knock for nearly 20 years after the VAT hike earlier this month, leading to warnings that the UK economy could be facing "a very painful period".

There was an "astonishing" eight-point fall in a key measure of consumer confidence to minus 29 between December and January, the biggest monthly drop since the 1992 recession, according to the survey by GfK NOP Social Research.

All the confidence measures recorded by the survey dropped over the past month but the biggest fall was in the score representing consumers' willingness to make major purchases, which slumped 22 points to minus 29.

The index representing people's expectations for their financial situation over the next year slumped to minus 12, which is 16 down on a year ago, while the score for people's expectations for the economy over the next year was at minus 30, compared to minus two a year ago.

Not looking good for housing demand :)

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http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8286800/UK-consumer-confidence-suffers-astonishing-collapse.html

Britons' confidence in the economy and their finances has suffered its biggest drop in close to 20 years, raising fears that the Government's austerity onslaught will set off a self-feeding downward spiral.

Got to love this from the Telegraph.

Clearly the over expansion of credit has no bearing on the matter.

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No surprise really, especially if people are trying to pay down debt.

They've already done their spending now it's payback time which means very limited spending.

Good job the UK isn't a consumer based economy.

Given the rise in Sky profits I'd say people haven't cut back.

Who else's results were out yesterday and were up? Can't remember but again it was something very consumerist...

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I take it that those "green shoots of recovery", the media kept telling us about last year, have now died? :rolleyes:

Bloomberg

http://www.bloomberg.com/news/2011-01-28/u-k-consumer-confidence-plummets-most-since-1992-gfk-says.html

U.K. Consumer Confidence Plummets Most Since 1992, GfK Says

U.K. consumer confidence plunged the most in almost two decades this month as an increase in sales tax hurt shoppers’ appetite for spending, a report by GfK NOP Ltd. showed.

The index of sentiment fell 8 points from December to minus 29, the lowest since March 2009, the research group said in a statement in London today. The decline was the biggest since 1992, it said. All five measures of the index fell, with a gauge on the climate for making major purchases dropping 22 points to minus 29.

Prime Minister David Cameron, who raised value-added tax to 20 percent from 17.5 percent this month, has vowed to stick to planned spending cuts to reduce the budget deficit even after the economy unexpectedly shrank in the fourth quarter. Household sentiment may be further undermined as inflation accelerates and the economy endures what Bank of England Governor Mervyn King warned will be a “choppy” recovery.

“Today’s figures, when combined with the bleak economic forecast, will make talk of a double-dip recession unavoidable,” GfK Social Research Managing Director Nick Moon said in the statement. “With inflation on the up and the full force of the cuts yet to hit, these figures could be the beginning of a very painful period.”

A measure of the general economic situation over the next 12 months fell 7 points to minus 30, GfK said. An assessment of the economy over the last year dropped 3 points to minus 54.

A gauge of Britons’ views of their personal finances for the coming year fell 4 points to minus 12, and an index for the last year declined 2 points to minus 18. GfK NOP conducted the survey of 2,000 people from Jan. 7 to Jan. 16. The research was carried out on behalf of the European Commission.

Inflation

U.K. inflation, which has exceeded the central bank’s 2 percent target for more than a year, accelerated to 3.7 percent in December. King said on Jan. 25 that it may rise to between 4 and 5 percent in the coming months and domestic spending faces “strong headwinds,” partly due to a squeeze on incomes.

The drop in confidence is hitting demand at stores and for property, reports yesterday showed. The Confederation of British Industry said its retail-sales index fell in January for the first time in three months, while Hometrack Ltd. reported that home prices dropped for a seventh month as demand plunged.

Still, a report today from the National House-Building Council showed new housing registrations, a gauge of future construction, rose 3.3 percent to 7,385 in December from a year earlier. NHBC Chief Executive Officer Imtiaz Farookhi said the “biggest obstacles” to the recovery in homebuilding are mortgage availability and “monetary pressures” on consumers.

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Given the rise in Sky profits I'd say people haven't cut back.

Who else's results were out yesterday and were up? Can't remember but again it was something very consumerist...

http://uk.finance.yahoo.com/news/John-Lewis-sales-fall-reuters_molt-3538534760.html?x=0

John Lewis sales fall as shoppers feel pinch
7:49, Friday 28 January 2011
LONDON (Reuters) - Department store chain John Lewis said sales fell last week, adding to evidence that an increase in VAT sales tax has further weakened already fragile consumer confidence.

Its over. Let the Great HPC begin.

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When VAT was cut by 2.5% everyone went around saying it was no big deal and wouldn't drive demand.

Now it's going up by 2.5% the press and those who are anti-Tory/coalition are acting as if it's the end of the world. Same applies with the anti-cuts rhetoric, in the scheme of things they aren't really that big!

So no wonder consumer confidence is going to slump.

Andy

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Its put me off looking at houses now. Might start looking again seriously in about 3 months when the huge number of houses that were listed after October will be ripening and about to fall off the tree.

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Given the rise in Sky profits I'd say people haven't cut back.

Sky makes it's money from lots of places, including advertising. Advertising is booked months in advance, so there's a lag between spend + return.

Its put me off looking at houses now. Might start looking again seriously in about 3 months when the huge number of houses that were listed after October will be ripening and about to fall off the tree.

Yep, November/December was my expectation

Edited by exiges

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http://uk.finance.yahoo.com/news/John-Lewis-sales-fall-reuters_molt-3538534760.html?x=0

John Lewis sales fall as shoppers feel pinch
7:49, Friday 28 January 2011
LONDON (Reuters) - Department store chain John Lewis said sales fell last week, adding to evidence that an increase in VAT sales tax has further weakened already fragile consumer confidence.

Its over. Let the Great HPC begin.

It is pretty clear that with the massive levels of debt taken on during our decade of debt, consumerism will not be a driver of the economy going forward.

John Lewis sales look pretty crazy "Sales in the previous two weeks had increased 4.1 percent and 38.7 percent respectively." Not sure this is the most reliable measure of the effect of the VAT rise.

The whole point of rebalancing the economy is to reduce consumerism, HPI and debt and promote manufacturing and exports.

This seems to be happening pretty well at the moment.

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No surprise really, especially if people are trying to pay down debt.

They've already done their spending now it's payback time which means very limited spending.

Good job the UK isn't a consumer based economy.

Im afraid all economies are consumer based.

i mean, who else is there to A produce wealth and B benefit from it.

it is only human beings. There is nothing else.

and all human beings are consumers...currently leveraged by energy.

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Worse than that it was before Merv's speech on living standards and before this report came out on consumer confidence!

but it was also before the express article highlighting Houseprices would increase at least 10K this year so this may well offset the negativity

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Im afraid all economies are consumer based.

i mean, who else is there to A produce wealth and B benefit from it.

it is only human beings. There is nothing else.

and all human beings are consumers...currently leveraged by energy.

Exactly, we are trying to move towards producing for others to consume rather than consuming ourselves. Consumerism based on HPI and debt leads to eventual financial collapse as we have found out.

If HPI was again running at 10% y/y and consumer confidence was soaring would that bode well for our future economic prosperity?

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Given the rise in Sky profits I'd say people haven't cut back.

Who else's results were out yesterday and were up? Can't remember but again it was something very consumerist...

I think its more that they are eating other telco operators lunches - especially BTs. Sky bundles are pretty competitive. I moved to sky from BT, and effectilvey got the sky tv content and skyplus for no more than i was paying to BT. The sky+ box is a major value adder IMO, but im sure PVRs are now here that can do similiar jobs.

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