- guardian.co.uk, Wednesday 31 March 2010 09.02 BST
A fall in consumer spending this year would threaten Britain's economic recovery. Photograph: Alastair Grant/AP
The British public's confidence in the UK economy and their own finances waned this month, prompting fears that people are losing faith in the economic recovery as the general election approaches.
The GfK NOP consumer confidence index, published this morning, showed that overall UK consumer confidence fell to -15 in March, from -14 in February. City analysts had forecast a slight rise, to -13. Economists said that the decline, although limited, suggested that the recovery in confidence seen in early 2010 may be running out of steam.
"The modest relapse in consumer confidence in March highlights its fragility," said Howard Archer, chief European and UK economist at IHS Global Insight.
The 2,000 adults interviewed by GfK NOP also took a more negative view of the overall economic situation over next 12 months. This measure came in at zero, compared with +4 in February. The index also indicated that consumers are becoming more cautious about of their own personal financial situation, with this measure falling to -15 from -13 in February.
People are still much more confident than a year ago, when overall consumer confidence was recorded at -30. But Nick Moon, managing director of GfK NOP Social Research, said the fall in consumer confidence could be a concern for the Labour party.
"With the election only weeks away the government will be disappointed that consumer confidence has slipped this month. The fall is small but still significant given we saw confidence improve for the first two months of the year," said Moon.
"Particularly disturbing is the lack of confidence in the country's economic performance over the next 12 months. While consumer outlook is more positive than the same time last year, this fall in confidence around budget time does not bode well," Moon added.
GfK NOP also reported that people are less confident that this is the right time to make a major purchase, such as a new car or kitchen. Archer said that many consumers will be reluctant to spend heavily this year.
"The upside for consumer spending will be limited for some time to come as households continue to face very challenging conditions, notably including high unemployment, low earnings growth, elevated debt levels, January's VAT hike and the prospect of further fiscal tightening ahead that will very likely include more tax hikes," he said.
A fall in consumer spending this year could threaten Britain's economic recovery, with Alistair Darling forecasting last week that the economy will grow by between 1% and 1.5% this year. Yesterday, in a boost to the government, GDP growth for the last quarter of 2009 was revised upwards to +0.4%. But last week two major retailers, Next and Kingfisher, warned that they were very cautious about consumer spending this year.
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