Consumer confidence is the highest since December 2007, bolstered by Government rescue measures, according to Nationwide.
The Nationwide Consumer Confidence Index recorded an 8% increase in October, bringing the index to 55, from 51 in September.
The building society attributes the positive swing to consumers being buoyed by the Government’s and Bank of England’s rescue plans. Confidence levels jumped 23% during the period of the Government's announcement of its support to the banking sector.
The largest uplift in confidence is due to consumers’ future outlook. The Expectations Index, which reflects the economy and labour market in six months time, increased by 17% to 69 in October. An optimistic 27% of consumers believe the economy will improve in the next six months; almost double that than in September.
However, Fionnuala Earley, Nationwide’s chief economist, says: “with the economy heading into recession, there will be bumpy times ahead for the UK consumer and it is likely to be some time before confidence returns to the level of a year ago.
“Rapid cuts in interest rates are however on the horizon and this may support a recovery in confidence going forward," she adds.
Gloomy economic news has affected consumers’ present perceptions. Confidence in the current economic climate fell by 10% to 35 during October. Three quarters of people describe the economy as ‘bad’ and 38% of consumers believe it will deteriorate in the next six months.
They are also feeling increasingly insecure in their jobs. Nearly 41% of Britons believe there are few jobs available now, up from 35% last month, yet 56% think the situation will worsen in the next twelve months, an increase from 48% in September.
Two thirds of people do not believe it is a good time to make a major purchase such as a house or car. Pessimistic consumers expect house prices to fall by 5.6% over the next six months, compared to 4.9% in September.
Nationwide’s Consumer Confidence Index is based on monthly TNS research, which surveyed 1,000 people from 22 September to 19 October.IFAonline
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