Consumer confidence in the UK has slipped to levels normally associated with a recession, raising further concern over the UK’s economic recovery.
The reading published by GfK NOP dropped for the third month in a row to hit minus 31 in August, 13 points below a year ago and one point lower than July.
It has dropped this low only three times before in the survey’s 37-year history, and on two of those occasions – in 2008/9 and in early 1990 – the reading was accompanied by a recession.
It also hit minus 31 in April this year, but bounced back the following month amid the sunny weather and the royal wedding.
But the latest reading shows the royal feel-good factor has now worn off as the US and eurozone debt crises lead to global recession worries.
A survey last week by the mortgage lender Nationwide showed consumer confidence dipped to 49 in July, well below its average reading of 79, and was expected to drop further in August amid the riots.
And an Ipsos MORI survey this week revealed that Britons are among the most pessimistic in the world about their country’s economic prospects, with just 9% of respondents expecting an improvement in six months’ time. Only the French were gloomier.
Nick Moon, managing director of GfK NOP Social Research, said: “With an increasing number of indicators suggesting the economy is either stagnating or returning to recession, the continuing loss of consumer confidence is a major worry for the Government.”
The latest survey, conducted on behalf of the European Commission, was driven lower mainly because people’s opinions about the general economic outlook declined four points. However, people’s opinions about their own financial situation have improved slightly on last month.
Mr Moon added: “While there has been a four-point drop in consumers’ general view of the economic situation over the next 12 months, there has been a small improvement in how they view their own financial situations, indicating people are starting to adapt to the austere economic climate.”