U.K. consumer confidence unexpectedly fell this month as households braced for Chancellor of the Exchequer George Osborne’s budget, when he pledged to maintain his austerity push, GfK NOP Ltd. said.
An index of sentiment dropped to minus 31 from minus 29 in February, the London-based research group said in an e-mailed report today. The median estimate in a Bloomberg News survey of 19 economists was for no change. A measure of Britons’ outlook for their personal finances fell 4 points to minus 10.
Osborne said March 21 he’ll freeze pensioners’ tax allowances and raise a sales levy on the most expensive homes in a bid to lower the budget deficit. With the fiscal plans and inflation squeezing households, the economic recovery is struggling to gain traction in an environment supermarket operator J Sainsbury Plc (SBRY) says is “challenging.”
“These figures make depressing reading for the government,” Nick Moon, GfK Social Research managing director, said in the report. “Consumers are becoming increasingly pessimistic about their personal economic circumstances over the next twelve months.”
A measure of shoppers’ assessment of their personal finances over the past 12 months dropped 4 points to minus 25, and an index of their views on the economy over the period rose 1 point to minus 59.
A gauge of the outlook for the economy in the coming 12 months fell 1 point to minus 30, and an index of the climate for making major purchases dropped 4 points to minus 31. GfK interviewed 1,998 people between March 2 and March 11.
Osborne lowered the top rate of income tax to 45 percent from 50 percent, saying it raised “next to nothing.” He said he’d claw back lost revenue with higher taxes on homes bought for 2 million pounds ($3.2 million) or more, the loss of tax breaks for pensioners and a clampdown on evasion by the wealthy. Moon said the budget is “unlikely to have a positive impact on consumer spending.”
The U.K. economy contracted 0.3 percent in the fourth quarter as services such as banks and airlines curtailed business. Real disposable income fell 0.2 percent, the second successive quarterly decline.
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