Oct. 28 (Bloomberg) -- U.K. consumer confidence fell to its lowest level in more than 2 1/2 years this month as Britons became more pessimistic about spending, adding to signs the economy may slip back into recession, GfK NOP Ltd. said.
An index of sentiment dropped 2 points from September to minus 32, the weakest reading since February 2009, the London- based research group said in an e-mailed report today. A measure of expectations for the economy fell 4 points to minus 31 and a gauge of households’ assessment of whether this is a time to make major purchases decreased 4 points to minus 32.
“Consumers’ outlook is becoming increasingly pessimistic about the U.K.’s general economic situation,” GfK Social Research Managing Director Nick Moon said. “The climate for major purchases has worsened, suggesting the government can’t rely on people spending their way out of the double-dip recession that is likely to be on the horizon.”
Britons’ confidence has been undermined this year by inflation that is almost double wage growth and the largest government budget squeeze since World War II. Data from the Confederation of British Industry yesterday showed retail sales fell for a fifth month in October as consumers cut back spending on hardware and footwear.
GfK said that when the index previously fell below minus 32, in March 1990 and June 2008, “consumer confidence was entering periods of sustained weakness and the U.K. economy was going into recession.” The drop in October leaves the confidence 13 points lower than a year earlier.
Bank of England policy makers expanded stimulus this month for the first time since 2009 as Europe’s debt crisis roiled financial markets and data showed that U.K. gross domestic product barely rose in the second quarter.
In an interview published yesterday, Bank of England Markets Director Paul Fisher said growth may be “not much better than flat” in the fourth quarter and there is a “significant” chance of another recession.
A gauge of Britons’ view of their personal financial situation over the next 12 months was unchanged at minus 10 in October, while a measure of their view of the economy over the past year slipped 4 points to minus 62, GfK said.
The research group questioned 2,000 Britons between Sept. 30 and Oct. 9 for today’s survey.
--Editors: Fergal O’Brien, Eddie Buckle
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