Consumer confidence 'at a low ebb'

AP Photo/John Minchillo

According to Nationwide Building Society's Consumer Confidence Index, confidence was at a low ebb in December of last year.

Their index fell to just 38 last month from 40 in November. Although still above October's record low of 36, it is still dramatically lower than the same time in 2010 when the index was at 55.

Nationwide blamed the rising cost of living and record levels of unemployment as well as the continuing sovereign debt crisis in the Eurozone.
Robert Gardner, Nationwide's chief economist, said; "Right to the end, 2011 was an extremely tough year for UK consumers.

"With the economy struggling to gain any sort of momentum, labour market conditions became even more challenging in the latter half of the year, with the unemployment rate rising to its highest level for fifteen years.
"The cost of living continued to rise at more than twice the rate of underlying wage growth, putting further pressure on household budgets and bearing down on sentiment."

Nationwide warned that the economic recovery was unlikely to gain much forward momentum in 2012. "It was greater pessimism towards the future – especially towards the wider economy – that was the main driver behind the decline in confidence over the month," explained Mr Gardner.

According to Nationwide, 74 percent of consumers rated the economic situation in December 2011 as 'bad' with just 10 percent predicting a better situation in the next six months.

Nationwide did predict however that slowing inflation would help to ease the squeeze on household budgets, and had some more positive news on spending.

The building society's spending index remained constant thanks to a greater propensity to make household purchases in December - one in three people believe now is a good time for purchasing household items.

However the building society said that consumers still have strong reservations when it come to making major purchases, and the population's downbeat mood can be seen in their attitudes to the housing market - consumers expect house prices to fall by 1.3 percent over the next six months.
Consultants Begbies Traynor also released figures on the number of companies in distress their Red Flag Alert Report for the last three months of 2011.
They said the figures showed the UK economy had hit the bottom of the economic cycle, with a 24 percent increase in companies experiencing critical levels of financial distress, compared with the same period of 2010.
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