LONDON (Reuters) - Consumer confidence fell to its lowest level in almost a year last month as the election and the prospect of an emergency budget darkened households’ outlook, a survey by the Nationwide Building Society showed on Wednesday.
Nationwide’s consumer confidence index fell to 65 in May, the lowest reading since June last year, from an upwardly revised reading of 75 in April.
The survey was carried out between April 19 and May 23. During the period an inconclusive election on May 6 was followed by negotiations which led to the formation of a Conservative-Liberal Democrat coalition on May 12.
“Consumers’ concerns over the state and direction of the UK economy may also have been affected by the announcement of an emergency budget in June,” said Nationwide chief economist Martin Gahbauer.
“Until the impact of this is known, and consumers understand where the focus of spending cuts and tax increases will be, it is possible that confidence in the economic situation will continue to stutter,” Gahbuaer said.
The new government plans sharper budget cuts than the previous Labour administration, and Greece’s sovereign debt crisis and disruption to air travel caused by a volcanic ash cloud may also have hurt consumer sentiment, Gahbauer added.
Consumers’ view of the economic situation over the next six months suffered the biggest fall, with this sub-index declining to 93 from 105 in April.
Their assessment of the present situation also worsened, while households’ readiness to spend and their view of the outlook for employment held steady.
Reporting by David Milliken; Editing by Ruth Pitchford