Consumer confidence jumps despite recession
Consumer confidence jumps despite recession
Wednesday 5th November 2008
Consumer confidence rose in October – despite the global banking crisis and the threat of recession.The Nationwide consumer confidence index shows an eight per cent rise – reflecting a rise in morale following the government's bank rescue plans and the Bank of England's 0.5 per cent interest rate cut.
However, confidence in the present economic situation fell by ten per cent, but the index measuring plans to spend was up.
Nationwide said the increase in people's propensity to spend was due to heavy discounts on the high street.
Fionnuala Earley, Nationwide chief economist said: "The actions taken by the government and the Bank of England to support financial markets do seem to have buoyed consumers' confidence.
"However, with the economy heading into recession, there will be bumpy times ahead for the UK consumer and it is likely to be some time before confidence returns to the level of a year ago.
"Rapid cuts in interest rates are however on the horizon and this may support a recovery in confidence going forward."
Nationwide now predicts a 40 per cent chance of a 0.5 per cent interest rate cut tomorrow from the Bank of England and a 55 per cent chance of an unprecedented 0.75 per cent cut. A full one per cent cut is given a one in 20 probability.
The research also looked at Brits' view of the jobs market.
Some 41 per cent of consumers think there are few jobs available now, up from 35 per cent last month. Looking forward, 56 per cent think there will be few jobs available in six months, up from 48 per cent in September.
House prices are expected to keep falling – with a property price drop of 5.6 per cent expected over the next six months, compared with 4.9 per cent in September.
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