Consumer confidence in the United Kingdom remained at a low level in August, contrary to economists' forecast for an improvement, as a modest uplift from the Olympics was offset by the grim economic outlook, latest data showed Friday.
The consumer confidence index remained unchanged month-on-month at -29 in August, data from market research agency GfK NOP showed. Economists had forecast the index to improve to -27. However, the latest reading was better than -31 recorded in August last year.
"Confidence has never been so low for so long - even during the dark days of the 2008-2009 recession. Unlike last year's Royal Wedding which boosted consumer confidence, there has been no spike to consumer sentiment following the Olympics," Nick Moon, Managing Director of Social Research at GfK, said.
British households were slightly less downbeat about their own financial situation in the past 12 months, with the corresponding sub-index rising to -21 in August from -23 in July. However, their expectations for personal finances in the next twelve months turned more pessimistic. The relevant indicator dropped to -10 from -8 in July.
The measure of consumers' views of the general economic situation in the past 12 months moved up to -55 from -59 in July, while the relevant expectations sub-index rose to -27 from -30, data showed.
The measure of major purchases decreased by five points from the previous month, while the indicator of households' perception of the appropriateness of the time for saving increased by two points, data showed.
"It's clear that consumer confidence is trapped in a spiral of depression and it doesn't look like improving any time soon, " Moon said.
The British Chamber of Commerce (BCC) today said it expects the economy to shrink 0.4 percent in 2012, and urged the government to take bold measures to boost growth. The latest outlook reverses the previous forecast for 0.1 percent growth.
In the second quarter, the British economy shrunk 0.7 percent sequentially, which was the steepest contraction in three years.
The BCC said it expects UK's national borrowing to overshoot the target, and the government is unlikely to achieve the target of eliminating the budget deficit by 2016-17.
Yesterday, the Confederation of British Industry (CBI) slashed its GDP outlook to reflect weaker economic conditions. The CBI sees 0.3 percent contraction this year, below its previous forecast of 0.6 percent growth. In 2013, the CBI forecasts GDP growth of 1.2 percent, revised down from its previous forecast of 2 percent, mainly reflecting a smaller contribution from net trade.
by RTT Staff Writer
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