Despite a reduction in growth expectations announced by the Bank of England alongside today’s Inflation Report, down to 2.5% from 3.4% for 2 011, increasing evidence from sentiment surveys shows a rising probability of one or more quarters of negative growth.
Today’s Nationwide consumer confidence survey confirms the GfK CC survey findings at the beginning of the month which showed confidence at recession levels. The July headline Nationwide CCI is down 7 points to –57, its lowest level since April 2009 when the economy was in the depth of the recession.
Of the three sub-indices comprising the Nationwide CCI, the Present Situations Index is up very slightly at 27 from 26, the Spending Index down 3 points at 96, although above its long-term average of 93 and the Expectations Index slumping 13 points to 77, the lowest level since March 2009.
Within the Expectations index all three sub-indices fell – the net balance of people expecting the UK economic situation being better than today in 6 months time fell from +3% to –5% on the month; the net balance of people expecting there to be many/some jobs available in 6 months time fell from –30% to –33%, and the net balance of people expecting household income to be higher in 6 months time fell to a record low of –7% from zero in June.
These very negative expectations reflect the pessimism that has gripped the consumer since the May general election with the reaction to the Emergency Budget reinforcing the gloomy mood.
Commented John Gilbert, Chief Executive of JGFR:
“Both the Nationwide and GfK surveys are extremely downbeat on job prospects and it is how quickly job sentiment can be reversed that will determine whether the current probability of a double dip recession can be avoided.”
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