Confidence up – Christmas spending may be better than expected

Despite the doom and gloom reaction of the media to the Autumn Statement, November’s GfK consumer confidence barometer (CCB) for The European Commission is a little more positive about the outlook.

The headline measure gained 1 point to -31 – still well at recession levels – largely on the back of a 5-point jump in the spending climate measure. A year ago the headline measure was 10 points higher (-21). While there is little change in the measures of personal finances or the economic situation, forward-looking measures of inflation and unemployment expectations both show gains and together with a jump in spending intentions on major purchases point to a consumer who may loosen the purse strings this Christmas with fewer savers in prospect. A season of goodwill may provide some short term respite from the unrelenting pessimism.

To see the full UK Consumer Confidence Briefing visit the free Members Area.

European agreement to stability measures will help the festive mood

UK sentiment increasingly depends on what happens in the euro-area – since June resolving the sovereign debt burden and the impact on European banks of write downs in bond values has weighed heavily on the economic outlook. Consumer confidence has dropped 11 points in the euro-area in the past year – down from -11 to -20 and is unchanged on the month. The measure uses the same common survey across EU countries, but is based on a slightly different combination of forward looking questions. The comparable UK measure is -24, unchanged on October and down 6 points on the year.

As in the UK economic growth forecasts are being downgraded. The 2012 assessment is for GDP likely to stagnate with growth forecast to be as low as 0.6%, similar to the latest UK growth forecast for 2012 produced by the Office for Budget Responsibility (OBR) down to 0.7%.

Many Europeans will be hoping that the package of measures proposed by the European Commission covering growth, governance and stability will be adopted at the Heads of Government meeting on December 9^th together with more immediate short term measures to help to reduce European bond yields and support the most indebted countries. Such an outcome would provide some Christmas cheer in very difficult economic times.

The November Consumer Confidence Monitor is published on December 2^nd. For details of our work in tracking the mood and intentions of consumers please contact 0208 944 7510 or 07740 027968 or email j.gilbert@jgfr.co.uk. JGFR writes a regular blog for The Marketing Society (- http://blog.marketing-soc.org.uk/2011/11/%e2%80%98virgin-rock%e2%80%99-%e2%80%93-a-new-combination-set-to-help-transform-high-street-banking/ ) and contributes a feature on the mood of the consumer to Argent, the quarterly publication of The Financial Services form (www.thefsforum.co.uk)