Training | 2010.01.05
Tax rises dent consumer confidence
• Nationwide survey finds gloomiest outlook for a year
• Construction sector shrinks again but jobs market picks up
Consumer confidence in Britain plunged to its lowest ebb in more than a year in December on the back of the rise in VAT and looming tax increases.
Nationwide\'s monthly consumer confidence index – measuring people\'s view of the current position and future prospects of the UK , including the general economy , employment and personal expectations – fell to 69 last month, down from 74 in November. It is the biggest fall since November 2008.
More people are pessimistic about the economy, with only 34% of people expecting it to be better in six months, down from 41% in November.
Nationwide said the rise in VAT from 15% to 17.5% this month, as well as other tax changes announced in the pre-budget report , were likely to have affected people\'s confidence and made them reassess their expectations for the future.
Martin Gahbauer, Nationwide\'s chief economist, said: "The five-point fall in confidence in December suggests that an element of caution may have begun to creep back into the minds of consumers over the Christmas period.
"This comes at the end of a positive year for the index, which gained some upwards momentum in 2009 to help claw its way up from the record low seen in January. The main driver behind this revival is likely to have been a renewed hope for the future economic situation and a belief that the worst of the recession is over.
"However, the looming VAT hike and other tax changes announced in the pre-budget report may have impacted on confidence in December, forcing people to review their expectations for the future. Although it is still early days, these lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn."
Separately, the Chartered Institute of Purchasing & Supply (CIPS) said that activity in Britain\'s construction sector contracted for the 22nd month in a row in December as demand dried up. Its purchasing managers\' index (PMI) rose to 47.1 last month, up from November\'s reading of 47. A mark below 50 signifies contraction.
David Noble, CIPS\'s chief executive, said: "December was another disappointing month for the UK construction sector. Unlike other parts of the economy, it seems unable to escape the shackles of the recession. Firms suffered from reduced client demand and falls in new business … [so] contractors are competing aggressively to secure the relatively fewer new contract tenders there are in the market."
Construction firms also continued to shed jobs in December as work dried up. CIPS said many construction companies reported they were still restructuring their operations in line with lower workloads.
However, Noble said there were some glimmers of hope as the residential sector showed a marked improvement in activity, with growth indicated for four consecutive months. "This suggests that the increase in house prices last year is beginning to have an effect on construction and encouraging new building," he said.
However, a report by the Recruitment & Employment Confederation (REC) and the accountants KPMG revealed a big rise in permanent and temporary contract staff employment in December. The number of permanent staff placements grew at its fastest pace since July 2007, while temporary and contract staff billings rose at their sharpest pace for 30 months.
Kevin Green, chief executive of the REC, said: "As we head into 2010, the recovery of the UK jobs market is accelerating. Employer confidence is increasing and vacancies are on the up, with the fastest growth in permanent jobs since July 2007. Temporary and contract placements also rose at the sharpest pace for 30 months, which underlines the crucial role that flexible working models will play in helping job-seekers back into work."
However, he warned that despite the increase in demand for both temporary and permanent staff, the jobs market will remain extremely competitive, particularly for younger candidates. "It is essential that the government\'s pledge to invest over £1bn to create 400,000 new youth job and training opportunities is met and that the private sector plays its part in getting younger candidates into work," he said.
For more information, please visit
http://www.guardian.co.uk/business/2010/[...]n-consumer-confidence-tax-jobs
Instagram is adding automatic in-app text translation - The Verge views: 1530
Here’s a ‘Brand-New’ Massive Multilingual Dataset for Machine Translation views: 1527