Wednesday, December 13, 2017

Consumer confidence in ‘negative territory’

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Consumer confidence in the economy has fallen into negative territory for the first time this year, according to a new survey.

The biggest consumer fear is an interest rates raise which is widely expected to occur in the next six months. Over 68 per cent say a rise in rates would have a negative impact on their personal finances.

57 per cent of people expect interest rates to go up in the next six months – up 13.6 percentage points from last month.

Bank of England governor Mark Carney said “the new normal” interest rate is likely to be 2.5 per cent and suggested it could reach that level in early 2017.

Around 15m UK home-owners appear to be worst affected but a significant rise seems to be off the cards. Just 4.6 per cent believe interest rates will “rise significantly”.

“Many people have adapted their household budgets to a low interest environment so any increase is initially going to come as a bit of a shock”, commented Neil Saunders, managing director of analysts Conlumino.

Conlumino say a 0.5 per cent rise in rates could cost the average mortgaged household £280 more a year in repayments – £1.9bn a year.

Saunders said of all the data it measures, job security, cost of living and other metrics were “pretty positive” but said interest rates were weighing heavily of the minds of consumers.