'Confidence curbed' by interest rate rise
Last month's interest rate rise is beginning to affect
consumer confidence, it has been revealed.
According to figures released by GfK NOP, the Consumer
Confidence Index score dropped by a point over the course
of June to stand at -3. The fall was attributed to the
decision by the Bank of England's monetary policy committee
(MPC) to increase the base rate to 5.5 per cent, which
could impact upon borrowers' ability to make secured loan
repayments.
Rachael Joy, consumer confidence representative for GfK
NOP, said: "After an eventful May, this month sees the
higher interest rates taking effect. Consumers have a more
negative impression of the general economic situation with
a six-point drop this month. Whilst at the same time,
consumers are also taking advantage of the situation and
the 'now is a good time to save' index has increased this
month and now stands at its highest level in recent years."
Figures from the market research company also indicated
that Britons are in a record mood to save money. In a move
which could see them offsetting debt management and loan
payment difficulties, the index for those thinking "now is
a good time to save" rose by one to +36, the highest level
GfK NOP claimed to have recorded in recent years. This
figure was also reported to be four points higher than the
score for last June.
Meanwhile, Britons' views towards their personal finances
were said to have remained unchanged this month. The index
recording consumers' view of their monetary situation over
the past 12 months was reported to be +3 - the same figure
recorded in May. Opinions about personal finance during the
forthcoming year had also remained consistent, remaining at
+13, a score which was also noted in June 2006. The study
also indicated that trend for making major purchases rose
throughout June to +6. However, this was said to be five
points lower than figures recorded during the same month
last year.
Overall, consumers' views about the British economy over
the past 12 months were said to have seen "the biggest
change" throughout the course of June. With a score of -24,
GfK NOP reported that the index has fallen by some six
points. Meanwhile, outlook about the general monetary
situation was noted to have stayed at the May figure of
-10. However, this was some eight points higher from the
same study carried out in June last year.
However, according to a study released by financial charity
Credit Action there is a shortfall of savings among
Britons. Just over one in four (27 per cent) consumers are
said to not have any money set aside, with a further 25 per
cent holding savings of less than £3,000. Meanwhile, three
million Britons describe themselves as "frivolous
spenders", as they decide to make purchases based on
desirability instead of affordability. Overall, two out of
three was said to subscribe to 'the buy now, think later
culture' which may consequently see them struggle to make
loan repayments.
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Abbi Rouse writes for AllAboutLoans.co.uk, an online loans
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