UK consumer confidence slips in October – GfK

LONDON: British consumers turned slightly more gloomy in October as they remained downbeat about the economy, although they continued to splash out on major purchases, a survey showed yesterday.

The monthly consumer sentiment index from market research firm GfK eased to negative 10 this month from negative nine in September, matching the consensus from a Reuters poll of economists, and continued to hover near a three-year low.

The survey has shown little change over the past five months and the latest reading will probably do little to alter the analysis of Bank of England (BoE) policymakers meeting this week to set interest rates.

Economists polled by Reuters expect the BoE will raise rates this Thursday for the first time in more than 10 years.

“As concerns about the wider economic prospects for the UK economy dampen our outlook, consumers are showing no real ‘get-up-and-go’,” Gf K analyst Joe Staton said.

Nonetheless, consumers’ appetite for spending on big-ticket items inched up to a five-month high, GfK said.

“Our enthusiasm for spending ... is more worrying than reassuring,” Staton said.

“Surging credit card use is fuelling spending at the expense of our appetite for saving, which is growing at the slowest rate since the start of the 2008/2009 financial crisis.”

BoE data on Monday showed that unsecured consumer lending continued to rise at an annual rate of close to 10 per cent in September.

Last month the BoE said British lenders needed to hold an extra 10 billion pounds of capital to guard against consumer loans going sour, as it was concerned that banks had overestimated the creditworthiness of their borrowers.