By Paul Hannon and Ilona Billington
LONDON--U.K. consumers remained gloomy about their prospects in July,
despite a number of efforts by policy makers to stimulate economic
growth, including the announcement by the Bank of England of more bond
purchases using freshly created money.
The prospect of hosting the Olympic Games also appears to have had
little impact on confidence, a key measure of which has never been as
low for longer in its 40-year history.
The market-research firm GfK NOP Tuesday said that while Britons
became more optimistic about the outlook for the U.K. economy in the
coming 12 months, that was offset by a more downbeat assessment of the
state of the economy now.
As a result, the headline measure of consumer confidence was unchanged
from June at minus-29, in line with expectations.
The refusal of Britons to snap out of their long funk will disappoint
policy makers, including the BOE, which this month decided to buy an
additional 50 billion pounds ($78.6 billion) of government bonds,
bringing its program of quantitative easing to GBP375 billion by the
time the latest phase is completed in October.
And the government will also be disappointed. Working with the BOE, it
has a launched a new program designed to spur bank lending to
businesses and households, as well as a raft of initiatives to
stimulate investment in new homes, railways and other infrastructure
projects.
"Things are looking very bleak for the government," said Nick Moon,
managing director of social research at GfK. "This is a clear
indication that all attempts by the Government to improve the
situation in the U.K. aren't making any impressions on the public
mood."
GfK surveyed 2,002 Britons between July 6 and 15 on behalf of the
European Commission, the European Union's executive arm. The survey
was complete by the time the Office for National Statistics revealed
that the economy contracted by 0.7% in the second quarter, an
unpleasant surprise that is likely to have a negative impact on
confidence.
As long as they remain gloomy, Britons are unlikely to spend more
freely, which will make it difficult for the economy to recover. The
impact of weak confidence on spending was clear in the Confederation
of British Industry's monthly survey of retailers, the headline
balance of which slid to +11 in July from +42 in June. The balance is
the difference between the percentage of retailers reporting higher
sales and those reporting lower sales.
A balance of just +3 retailers surveyed expected retail sales to rise
next month, down from +32 in the June survey, while the volume of
orders placed upon suppliers slipped to +5 in July from +23 in June.
The Bank of England reported that total consumer lending grew by just
GBP0.3 billion in June, down from GBP1.1 billion in May, dragged down
by net mortgage repayments.
Jason Douglas and Alex Brittain in London contributed to this story
Write to Paul Hannon at paul.hannon@dowjones.com
(END) Dow Jones Newswires
July 30, 2012 19:01 ET (23:01 GMT)
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