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Consumer confidence dips as fears grow for economy

Consumer confidence has continued to slip in the last few months due to uncertainty over the economy and fears sparked by public sector cuts, a report by a bank has found.

The Northern Bank's consumer confidence index for April to June recorded a fall of two points to 116.

Fears for the future of their finances, savings expectations, and the outlook for job security had combined to create cold feet among consumers, the bank said.

Yet there was some slight improvement in the consumers' view of their current financial position compared to a year ago.

The bank's chief economist Angela McGowan said: "Households experienced a knock to their confidence in the last quarter for a number of reasons. A combination of high prices, job losses, and pending public sector cuts are the obvious reasons, but more subtle influences are also at play.

"The uncertainty of a UK general election with an ambiguous result, the formation of a new coalition government, and an emergency budget can all work in the background to make households feel uncertain."

Only 15% of people thought their household finances would get better in the next year, while just over a quarter thought things would get worse for their money situation.

Ms McGowan said the proposed cuts in benefits were casting a shadow over many families in Northern Ireland.

"Currently 19% of all households in Northern Ireland receive child tax credit, and some of these households will be anticipating a loss of future disposable income if their credits are withdrawn. In addition, the freezing of child benefit will effectively translate to reduced disposable income for households with children."

And consumers also feared for their job security, with over one in 10 saying they expected to be less secure in their careers as the year progressed. Ms McGowan said: "Job losses in Northern Ireland have not been as severe as elsewhere in the UK, but as the government's plans for public sector cutbacks are initiated, we expect this aspect of household confidence to fall further."