Consumers: Increasing confidence may ward off double dip

The prospect of a double-dip recession may have been held off after consumer confidence in the British economy improved in August for the first time in five months, says a research group.

The Gfk NOP Consumer Confidence Index increased this month by four points to minus 18 – the first increase since February.

Confidence was lifted across the survey, including improvements in confidence in personal finance situations in the previous and forthcoming 12 months, as well as confidence in the general economy.

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Nick Moon, managing director of Gfk NOP Social Research, said: "Overall, consumer confidence has been in constant decline for the last five months and a further fall would have made a double-dip recession seem a very real prospect. The Government will undoubtedly read these figures with a great deal of relief."

But Mr Moon said the gain merely reversed a similarly large drop in consumer confidence in July – and remained at a level similar to that in May 2009, when the country was deep into the recession.

The survey comes after official figures from the Office of National Statistics showed a 0.7 per cent increase in consumer spending between April and June compared with a fall of 0.1 per cent in the previous three months.

But economists warned the levels of spending were not likely to grow at a similar rate as austerity measures kick in.

Accountancy body ICAEW and accountants Grant Thornton believe falling confidence will slow down the economic recovery in the second half of the year.