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Consumer confidence falls over fears of further economic cuts

Published:  23 July, 2010

Consumer confidence has fallen for the first time since April 2009 according to latest figures released by the British Retail Consortium and Nielsen.

The quarterly Consumer Confidence survey asks consumers how the feel about job prospects, their own personal finances, spending intentions and major concerns. The latest quarter's figures shows the index fell two points to 78 in the last three months - the first fall since April 2009.

Concerns over the economy have shot up, with 39% of people citing this as their first or second biggest concern (up from 27% in March). The next biggest
concerns were debt and job security.

Seventy-one per cent of respondents think their job prospects over the next year will be 'bad' or 'not so good'. Over half say the same about their personal finances.

The survey also reveals that 82% of people believe the country is still in recession. While that is down slightly from 84% in March, a much smaller proportion
thinks we will be out of recession in a year's time. In March 44% thought Great Britain would not be out of recession within 12 months. That figure has risen to 52 %.

Justin Sargent, group managing director for Nielsen Consumer, UK & Ireland, said: "Our survey tells us that consumers are starting to feel more worried about jobs and money and debt and this is a concerning turn of events. Many economists have talked about a 'double dip' recession and the results of this survey would suggest we are at a crucial point in the consumer's mind.

"Hopefully sentiment will stabilise and this will turn out to be a minor fluctuation on our road to recovery.

"Recent employment figures were positive and interest rates remain low which helps people feel more secure but the fact that 'saving' remains the number one thing consumers say they do with their spare cash indicates that people are making concerted efforts to build themselves some additional security."

Stephen Robertson, British Retail Consortium Director General added: "British consumer confidence is below the global average,suggesting we're more unsure about future recovery than other countries.

"But, though confidence has fallen recently, it's well up on this time last year and retail sales have proved reasonably resilient. The impending VAT increase will encourage some customers to buy this side of January.

Other findings from the survey include:

· Sentiment over job prospects has hardly changed over the
last three quarters with only 23% believing that job prospects in Great Britain will be excellent or good in the coming year. (3% said 'good', 20% said 'excellent').

· There has been a three percentage point jump in the number of people who feel very negatively about their own personal finances. 12% of people now believe their own personal finances will be 'bad' and a further 42% believe they will be 'not so good' over the year ahead.

· There has also been an increase in the number of people who believe that now is a 'bad' time to buy the things they want and need. 16% believed this in Q1 and now 19% think this. A further 46% believe that it is a 'not so good' time to be spending.

· After the economy (39%), debt (19%), job security (16%), increasing fuel prices (16%) and utility bills (15%) are cited as people's main concerns (total of first and second
biggest concern).

· Savings and holidays are the most popular ways that people use their spare cash. But 22% of people said they
have no spare cash, up from 19% in Q1.

· The most heavily cited strategies that consumers are using to stay in budget fall into two groups - firstly people are trying to spend less on everyday essentials (e.g. try to
save on gas & electricity (63%), switch to cheaper grocery brands (62%), spend less on new clothes (62%).