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June 16, 2010    

UK consumer confidence sees sharp fall in May

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by Kay Murchie

The latest survey from the Nationwide Building Society has revealed a sharp fall in UK consumer confidence for the month of May.

The building society’s consumer confidence index plunged to 65 last month – the lowest level since June 2009, down from a revised reading of 75 in April.

According to the Nationwide, its survey reflects the fact that consumers are concerned about the upcoming emergency budget and ongoing economic uncertainty.

However, the Nationwide highlights that the survey was conducted between April 19 and May 23. During that time, there was political uncertainty due to the inconclusive general election.

This led to a coalition between the Conservative party and the Liberal Democrats on May 12.

Nationwide chief economist, Martin Gahbauer, comments: “Consumers’ concerns over the state and direction of the UK economy may also have been affected by the announcement of an emergency budget in June.

“Until the impact of this is known, and consumers understand where the focus of spending cuts and tax increases will be, it is possible that confidence in the economic situation will continue to stutter,” Mr Gahbuaer added.

In the meantime, the Nationwide said consumers are concerned about both the current and the future economic situation with the expectations index diving by 12 months. This index has now fallen by 26 points since February.

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