British consumers are likely to tighten their belts according to Travelex, the foreign exchange specialist.
The company made its prediction after the spate of doom and gloom media headlines that followed last week’s Comprehensive Spending Review.
Mark Bolsom, who is the head of the UK Trading Desk at Travelex Global Business Payments, said it was not surprising that consumers had cut back on spending considering all the negative press we have seen recently.
Sales volumes in the UK had been expected to rise by around 0.4% in September. The reality was rather different as data from the Office of National Statistics actually showed sales volumes dropped by 0.2%. Bolsom said that the data proved that the economic recovery in the UK had already peaked.
The Nationwide Consumer Confidence Index also dropped last month, from 62 points in August to 53. And the spending intentions index fell to its lowest level in nearly 2 years. Larger purchases, such as cars and houses, seem to be among the main items to be put on the back burner.
However, the British Retail Consortium believes that consumer confidence may now begin to rise. A BRC spokesman said that by acting now to reduce the fiscal deficit, the government has provided the country with early certainty. This certainty could lead to consumer confidence increasing as last month’s dip was partly caused by the uncertainty surrounding jobs and services.
The BRC has called on the coalition to remain consistent in its policy making decisions so that enterprises and limited companies get the much-needed predictability that they need to help them bolster the private sector recovery.
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