Consumer confidence fell for the second month running in June and now stands at 63 points - a similar level to 12 months ago, and 21 points below February's interim peak, according to the
Nationwide Building Society’s Consumer Confidence Index.
Faith in the present situation rose slightly during June, with the Present Situation Index the only one to see an increase over the month, albeit slight. The Expectations and Spending Index both fell back in June reaching their lowest levels since May 2009 and January 2009 respectively.
There was a small fall in consumers' optimism towards the housing market in June, with consumers expecting the value of their home to increase by 0.7 per cent over the next six months. This is a decrease of three tenths of a percentage point from May's figure.
“With the coalition government now established and greater clarity about future fiscal plans, it may be that we begin to see confidence stabilise somewhat in the coming months following a period of political uncertainty,” said Martin Gahbauer,
Nationwide's chief economist.
"The emergency Budget is just one of a number of news stories that will have been on the minds of consumers during June, with the BP crisis, BA Union strikes and the continuing sovereign debt crisis in the Eurozone dominating headlines.
“These will have done little to boost sentiment among consumers and faith in the current economic situation remains close to its record low. Just six per cent of consumers believe the current economic situation to be good, while those who believe it to be bad crept up to 72 per cent during the month.
"Official figures showed UK retail sales fell during June despite the onset of the World Cup, which can so often create a flurry of activity on the high street as consumers stock up on food, drink, and new televisions.
“However, concerns over what was to come out of the emergency Budget may well have led to a more cautious approach to spending during June. By historical levels, confidence in spending remains relatively high.
“With news that VAT will increase from January and that the Bank of England base rate is likely to remain unchanged over the coming months, consumers may feel encouraged to spend more over the second half of this year.
“Nonetheless, consumer willingness to spend remains part of a fine balancing act with the employment situation and levels of disposable income."
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