British consumer confidence has fallen back to a ten-month low, in the first measure since new austerity measures were announced by the government.
July's Consumer Confidence index produced by Gfk NOP dropped for the fifth consecutive month, hitting its August 2009 level, which was a period when the British economy was still shrinking.
The GfK NOP index showed a sharp fall in confidence in the "general economic situation" over the next 12 months, to -25 from -12 in June. Consumers were also more negative about their personal finances, dropping to -6 from -2 on the index.
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The survey, which began in 1974, found one measure to improve in July was the "climate for major purchases", which remained in negative territory but climbed eight points to -16. Mr Moon said the rise in VAT to 20pc from 17.5pc in January 2011, announced in the Budget, could partly explain why consumers felt now was a better time to make a major purchase compared with a month ago.
The one positive piece of the survey actually went up for the wrong reason -- more taxes are coming. In fact, six out of ten consumers (58%) expect the economy to double dip:
"It is ironic that a reduction in consumer spending – driven by economic uncertainty – could in fact bring about the thing people are most concerned about: a dip back into recession.
Are double dips in economic activity truly self-fulfilling prophecies? Ie., if everyone expects one and thus cuts spending, do they cause a double-dip? We're a bit skeptical of this view, given that it promotes a 'think positive and the economy will be fine" view, which we tend to find ludicrous.
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