Britons concerned over downturn as outlook for economy weakens

31 Oct 2015


UK citizens are getting worried over the economy's staying power.

Market research group GfK has said in its monthly consumer confidence index, that a measure of Britons' outlook for the economy over the next 12 months had fallen to minus 4 in October, the lowest reading this year.

Overall sentiment index had also weakened, though peoples' view of their personal finances remained unaffected.

The survey served to show the contrast between weakening global growth and the record-low interest rates and higher wages helping UK consumers.

According to data this week, economic growth cooled in the three months through September, a sign that the UK economy might be falling prey to headwinds emanating from emerging markets.

''The good news on the domestic front -- with households lifted by wage growth, low interest rates and near-zero inflation -- is being tempered by concerns about our ability to shrug off the global downturn,'' said Joe Staton of Gfk.

The consumer boost might not last much longer, with Bank of England officials saying they expected prices to increase starting early next year.

The central bank is set to publish forecasts next week, along with its latest policy decision, when it was expected to keep its key interest rate at a record-low 0.5 per cent.

According to GfK, October marked a five-month low on a barometer of consumer mood, while a separate survey of retailers by the business group CBI indicated sales had undershot expectations after a strong September.

GfK's headline consumer confidence measure slumped to +2 in October from +3 in September and consumers continued to be gloomy about the economic situation over the last 12 months as also over the coming year, the poll of 2,000 people, conducted for the EU revealed.

According to the survey, people were less certain over whether now was a good time to make major purchases such as furniture or electrical goods.

The news follows reports that businesses are being hit by weaker demand as the global economy loses steam and UK consumers worry about interest rate rises and more government spending cuts.

Official figures this week showed UK GDP growth eased in the July-September quarter.

The (Confederation of British Industry) CBI's indicator of retail sales volumes signalled the slowest growth for six months in October. The industry body's survey of 112 firms, which assesses the sector based on a balance of companies' responses, showed 38 per cent said volumes were up on a year ago, and 20 per cent said they were down, giving a balance of +19 per cent, as against +49 per cent in September.

The UK economy has expanded at a less than anticipated rate of 0.5 per cent in the third quarter over the June quarter due to sluggish global demand and a strong currency, according to preliminary report released by the Office of National Statistics (ONS). (See: UK GDP growth slows to 0.5% in Q3).

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