LONDON, March 30 (Reuters) - British consumer confidence unexpectedly fell to a three-month low in March as Britons grew increasingly worried about the outlook for their finances and for the economy as a whole, denting hopes of a consumer-fuelled recovery.
The headline consumer confidence index, based on a survey by GfK NOP, fell to -31 in March from -29 in February, the lowest since December and confounding expectations for a modest improvement to -28.
The GfK figures will make worrying reading for the Bank of England, which had been hoping that a recovery in consumer demand later this year would help drive Britain’s economic recovery. They are also likely to reopen the debate over whether the central bank will need to inject more stimulus to boost growth.
The Bank of England is due to complete its latest bout of quantitative easing in May, rounding off 125 billion pounds of purchases since October.
Most analysts think the central bank will call a halt to the scheme when the current purchases are complete, but Friday’s data, which follow weak housing market and lending figures earlier this week, could revive expectations it will do more.
A breakdown of the GfK index showed that four out of the survey’s five sub-sectors fell in March.
The index gauging people’s expectations for their personal finances over the next year fell to -10 from -6 and the index which measures consumers’ appetite to spend on big-ticket items fell to -31 from -27.
GfK said the data were a “worrying sign” for hard-pressed retailers, noting that finance minister George Osborne’s March 21 budget was unlikely to lift consumer spending.
Osborne raised the income tax threshold for low earners, but also raised taxes on tobacco, alcohol and air fares. Duty on petrol, already at a record high, is due to rise in August, putting further pressure on squeezed household budgets.
The survey was conducted between March 2 and March 11 on behalf of the European Commission, and covered 1,998 people. (Reporting by Fiona Shaikh; Editing by Andrew Heavens)