Businesses are starting to feel the effects of interest rates rises and bad weather as consumer confidence tumbles, it has been claimed.
According to the Personal Credit Index from Creditexpert.co.uk, consumer confidence fell four points, from 100 to 96, in the second quarter of 2007 – the largest fall recorded so far.
The combination of five interest rate rises since August and June flooding in the Midlands is a likely contributor to the drop, according to Creditexpert.
Those living in London are feeling the pinch the most, the report found. Consumer confidence in the capital fell to a record low of 89, while those in Wales and the Midlands saw their confidence level drop nine points.
“Although national financial confidence has not quite hit an all-time low, we’re seeing great regional fluctuation quarter on quarter and, in London, the worst regional figure ever recorded,” said Jim Hodgkins, managing director of CreditExpert:
“Interest rates are clearly hitting Londoners and Southerners hardest as house prices are higher there – and, unfortunately for them, it’s looking as if things are going to get worse.”
The negative effect on spending caused by the floods and interest rate rises was also emphasised by retailers.
“Retailers are doing much to stimulate sales,” said Mike Watkins, senior manager of retailer services firm Nielsen.
“We should expect to see further price discounting and promotional incentives as the impact of the latest bad weather and another rise in interest rates hit the already cautious consumer.”
© Crimson Business Ltd. 2007
