U.K. Consumer Confidence Increases in August, Nationwide Says
U.K. consumer confidence rose in August for the first time in four months as Britons’ optimism about the future economic situation increased, Nationwide Building Society said.
The index of sentiment rose 5 points from the previous month to 61, the London-based customer-owned lender said in an e-mailed statement today. A gauge of expectations rose 7 points to 84.
While Britain’s economy grew at the fastest pace in nine years in the second quarter, the pace of the recovery may flag as the government implements the biggest spending cuts since World War II to reduce the budget deficit. Deputy Prime Minister Nick Clegg said last week that the recovery is likely to be “choppy and uneven.”
“These figures are an encouraging sign that consumers may be starting to feel more upbeat as the U.K. continues to recover,” Mark Saddleton, Nationwide’s head of economic and market analysis, said in the statement. There may be “downward pressure” from “public-spending cuts, a stuttering housing market and a difficult job market.”
Chancellor of the Exchequer George Osborne has outlined spending cuts and tax increases totaling 113 billion pounds ($174 billion) to reduce a budget gap that widened to 11 percent of economic output in the fiscal year through March. Osborne will announce details of the cuts in the Comprehensive Spending Review on Oct. 20.
Recent data indicate the pace of U.K. economic growth is cooling, with gauges of services, manufacturing and construction declining in August.
Associated British Foods Plc said yesterday that sales growth at its Primark discount-clothing chain slowed in the second half of the year. London-based furnishings and clothing chain Laura Ashley Holdings Plc said on Sept. 10 that the consumer outlook is “uncertain.”
Concern that house prices will continue to decline also weighed on sentiment in August, according to Nationwide. Today’s report showed consumers expect the value of their home to decline by 0.1 percent over the next six months. In June, they projected a 0.4 percent increase.
The Royal Institution of Chartered Surveyors’ housing- market gauge fell to the lowest in 15 months in August, a separate report today showed. The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 32 percentage points, compared with a negative reading of 8 in July, London-based RICS said