Fears over economy sees confidence drop

A bleak survey by GfK NOP shows that over the past month people have become more miserable about their personal finances and the state of the economy and are also less willing to save.

The survey’s consumer confidence index fell by four points to minus 25, a decline only topped by January this year over the past 12 months.

In a further blow to the high street, the survey’s measure judging shoppers’ view of the climate for major purchases fell again.

The past two weeks has seen a raft of high street names go into administration including Jane Norman, TJ Hughes, parts of Habitat and the Moben kitchen chain, but the drop in consumer confidence makes the outlook a “gloomy one” for the high street, according to Nick Moon, GfK NOP’s director.

Mr Moon said confidence fell across all of its measures last month and while he says it was inevitable there would be a drop after the feel-good factor of events such as the royal wedding, the fact that it was so large “will disappoint the Government”.

And with the squeeze on household budgets intensifying, the number of respondents who said now was a good time to save decreased, backing up recent official data. The Office of National Statistics recently highlighted a downturn in savings, with the money left to put aside after all household spending falling to 4.6 per cent from 5.1 per cent in the first three months of 2011.

GfK NOP’s savings index is now five points lower than this time last year after an eight-point reduction in June.

The consumer confidence survey was carried out among 2,002 individuals between June 3 and 12.

n Squeezed household incomes mean one in 10 Britons has no savings while a third have been left with too little cash to cope with an emergency, research claims.

Some 13 per cent or six million people have no savings, according to research by NS&I, the Government-backed lender, while a quarter added they expected to save less in the next three months.

The survey found that only 26 per cent of people set themselves a savings goal – with most who do saving for a holiday at 37 per cent, a house at 35 per cent, retirement at 21 per cent, a car at 21 per cent and their children’s future at 19 per cent.

Tim Mack, savings spokesman at NS&I, said pressures on disposable incomes often prevent people setting aside as much as they would like, though he added there were encouraging signs among the young, with many more 16 to 24-year-olds committed to saving than the 35 to 44-year-old age group.