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Consumer confidence takes its biggest monthly drop

The confidence of UK consumers in the economy and their finances has suffered its biggest monthly drop in almost 20 years, a survey has suggested.

Rising VAT was a key factor behind the “astonishing” confidence fall, the GfK NOP Social Research report said.

More government austerity measures and the surprise contraction in the economy meant talk of a double dip recession was “unavoidable”, the study said.

According to the report the eight-point fall in a key measure of consumer confidence between December and January, to minus 29, was the biggest monthly drop since the 1992 recession.

Nick Moon, MD of GfK NOP Social Research, said: “The VAT increase is the first of the government’s austerity measures that has had a widespread impact on consumers**,** and it seems to have hit people’s economic confidence hard, especially as the biggest drop was in consumers’ appetite for major purchases.

“With inflation on the up and the full force of the cuts yet to hit, these figures could be the beginning of a very painful period.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .