UK Consumer Confidence Dips Surprisingly on Increased Pessimism, Smashes BoE Expectations

The British consumer confidence unexpectedly fell to a three-month low in March as Britons grew increasingly worried about the outlook for their finances and for the economy as a whole.

The overall index score decreased two points to -31 from -29 in February, according to the survey released by GfK NOP. It is the lowest since December and confounding expectations for a modest improvement to -28.

The index was three points lower than in March 2011.The figures will make BoE to worry as it was expecting recovery in consumer demand later this year which would help drive Britain's economic recovery. The Bank of England is due to complete its latest round of quantitative easing in May, rounding off 125 billion pounds of purchases since October.

"These figures make depressing reading for the government, especially when you consider that the index has been mired within a couple of points of the present levels for the last nine months. Consumer confidence has returned to the weak levels of the second half of 2011, emphasising just how fragile the improvement in January and February was," said Nick Moon, Managing Director of Social Research at GfK.

The index shows that consumers are becoming increasingly pessimistic about their personal economic circumstances over the next twelve months, a worrying sign for the already hard-pressed retail sector. With this month's budget unlikely to have a positive impact on consumer spending, shops will be hoping that the bumper summer of the Diamond Jubilee weekend and the Olympics can bounce people from their present malaise.

A measure of Britons' outlook for their personal finances fell 4 points to -10, shoppers' assessment of personal finances over the past 12 months also dropped 4 points to -25 and an index of their views on the economy over the period rose 1 point to -59.