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U.K. consumer confidence takes a tumble
Bloomberg News

FRIDAY, DECEMBER 30, 2005


LONDON A measure of British consumer confidence unexpectedly fell to a two-and-a-half-year low in December as consumers grew more pessimistic about the economic outlook and said they were less likely to make a major purchase, a survey showed Thursday.

The main measure of confidence fell to the lowest reading since March 2003, a survey released by GfK NOP for the European Commission showed.

Britain is heading for its slowest annual growth since 1992 after a surge in oil prices and the slowing of a 10-year housing boom caused consumer spending to weaken in the first half. The British Retail Consortium reported its first increase in retail sales in eight months in November.

"This is consistent with our view that consumer spending is unlikely to see a sustained marked improvement, in the near term at least," said Howard Archer, an economist at Global Insight. He said reports of relatively high consumer interest were "largely due to price-conscious and still cautious shoppers looking to take advantage of discounts."

The survey's main measure of confidence fell to minus 9 from minus 8 in November. The survey also showed pessimism about the wider economy even as the housing market has shown signs of recovery and oil prices have eased from record levels. An index of perceptions about the general economic situation over the next 12 months fell to minus 20 from minus 19, GfK reported.

Households were reported to be less optimistic about their personal finances in the months ahead, as that measure fell to 7 from 8. The report also cast doubt on spending over Christmas, when retailers normally sell the most goods. Fewer consumers than the month before said they were prepared to buy expensive items, with the survey's major purchases measure dropping three points to a reading of 2, GfK said.