U.K. consumer confidence dropped last month and may decline further after the economy slipped into a double-dip recession, according to Nationwide Building Society.
An index of sentiment fell to 44 from 53 in March, the Swindon, England-based customer-owned lender said in an e-mailed report today. A gauge of consumers’ expectations for the economy also plunged. The survey was conducted before data on April 25 showed the economy shrank for a second quarter in the three months through March.
The index signals “ongoing caution on the part of U.K. consumers,” said Robert Gardner, chief economist at Nationwide. “It’s not surprising that confidence remains fragile, with the economy shrinking over the past six months and labor market conditions still weak.”
Retailers including J Sainsbury Plc and Dixons Retail Plc have described the situation as “uncertain” as the economy falters and unemployment stays close to a 16-year high. Still, with inflation concerns growing, the Bank of England yesterday resisted expanding stimulus.
A gauge of Britons’ outlook for the economy fell to 60 in April from 73 in March, Nationwide said. Their assessment of current economic and employment conditions slipped to 21 from 24 and a measure of whether it’s a good time to make a major purchase, such as a house or car, declined to 75 from 86.
Gardner said one-time factors may affect sentiment in the coming months. While news of the double-dip recession “may further depress” the gauge in the near term, the Olympics and Queen Elizabeth II’s jubilee may “lift consumer spirits.”
“Whether or not these short‐term fillips translate into a sustained upturn in confidence will depend on the performance of the wider economy,” he said.
The Bank of England held its bond-purchase target at 325 billion pounds ($526 billion), ending a second round of stimulus. Officials also left the benchmark interest rate at a record low of 0.5 percent.