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Economy in Brief

UK Consumer Confidence Drops
by Robert Brusca February 28, 2008

The UK economy has dropped and is dropping sharply in early 2008.The index is the weakest it has been in at least 10 years. Over the past 12 months households still rate their own financial situation in the top 80 percentile of its range the past 10 years. But they rate the time to make major purchases as the worst in at least 10 years.The general economic situation is called the worst in 10 years and the CPI situation rates as the worst in 10 years.The financial situation over the next 12 months is also rated as the worst in the past 10 years. Income expectations are the lowest in 10 years for lower as well as upper income earners.

Like in France, the UK consumers are very disturbed by recent events. Both UK and French consumers rate prices as the worst in some time. Living standards have been eroded in both countries. Despite Europe’s continuing to grow there are obvious risks to the economy with consumers feeling so glum. We see it in recent reports in the US, in the UK, in France as well as in Japan.Consumer spending has lagged in Europe, in the US and in Japan and we see why, as consumers are forced to rate their own situation and that process tells us how bad they feel. Weak growth, financial turmoil, rising energy and food prices are taking a toll on consumers.

GFK Consumer Survey
          % of 2Yr % of 10Yr
  Feb-08 Jan-08 Dec-07 Nov-07 Range Range
Consumer Confidence -17 -13 -14 -10 0.0% 0.0%
Current
Household Fin Sit 24 24 25 25 75.0% 83.3%
Major Purchases -19 -13 -14 -7 0.0% 0.0%
Last 12 Months
Household Fin Sit -1 2 -1 0 37.5% 44.4%
General Econ Sit -40 -36 -36 -32 0.0% 0.0%
CPI 82 78 74 73 100.0% 100.0%
Savings 28 30 33 35 22.2% 75.9%
             
Next 12-Months
Household Fin Sit 6 7 8 9 0.0% 0.0%
General Econ Sit -29 -26 -26 -21 0.0% 16.7%
Unemployment 32 29 30 31 50.0% 70.8%
Major Purchases -22 -19 -19 -20 12.5% 6.7%
Savings 16 18 19 20 36.4% 74.1%
             
By Income
Lower -24 -17 -19 -16 0.0% 0.0%
Upper -11 -12 -7 -6 5.6% 5.3%
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