A poll for the European Union released on Friday shows that British consumer confidence fell for the second month in a row.
The month-on-month fall of two points in the GfK NOP Consumer Confidence poll to -19 is still massively better than the -37 in January this year, but a decline from October's optimism which saw the Index at -13. Nick Moon of GfK NOP Social Research said: "After a dramatic increase
in the index from August to October it has now fallen back for two months in a row, and another month of falls could see all of the gains since August disappear. This must be concerning for the government, although the index is still massively higher than it was a year ago."
"What will be particularly worrying for Gordon Brown is that the index for the state of the economy, which had crept into positive territory, has fallen by a substantial nine points to -6," said Moon.
The lack of consumer confidence was also evident in the retail figures for November, released on Thursday. Experts expected a modest rise month on month, but saw a 0.3-percent decline last month on October's figures.
October had seen a 0.6-percent month- on-month rise.
Commenting on the retail sales figures, David Kern, Chief Economist at the British Chambers of Commerce, said: "The unexpected fall in November retail sales highlights the obstacles facing Britain's economic recovery.
Although it is likely that the economy will register small growth in the fourth quarter of 2009, any recovery will be difficult to sustain if access to finance is not improved, and the regulatory burden on business is not
eased."
But Prime Minister Brown has a pressing political problem, and the GfK Nop Consumer Confidence figures will bring only small comfort.
Labor has been in power since 1997 and has won three elections on the trot -- all of them under the leadership of Tony Blair. When Blair stepped down as Prime Minister in the middle of 2007, Brown was initially welcomed by media and public.
However, since he took office, Brown and Labor's popularity has gone into marked decline. The effects of the global financial crisis on Britain have been severe, and Brown has drawn criticism because he was the chancellor of the exchequer, or the finance minister, for the 10 years before he became prime minister. Many voters and pundits attach some blame to him for allowing the conditions which created the crisis.
Brown must call a general election by June at the latest, the maximum five years since the last one. So how does it look for Brown, who has been besieged for much of the past two years?
The most recent opinion poll was on Dec. 14, for the Guardian newspaper. The ICM poll showed the Conservatives ahead on 40 percent (unchanged month on month), Labor on 31 (up 2 percentage) and the Liberal Democrats down 1 percentage at 18. Other parties were on 11 percent.
The Conservatives are steady, but Labor is gaining from the Lib Dems and from small parties. If the election was held now, Labor would be out but Conservative support is not enough to give them outright victory. They would have to look for help from other parties.
The poll was taken after Chancellor Alistair Darling unveiled his pre-budget report (PBR) last week, and the next election will likely be
fought on finance.
Darling, struggling with an economy that has spent the past six quarters shrinking and is now the only G20 economy still in recession, said
the year-on-year decline in GDP for 2009 would be 4.75 percent. He looked for a modest return to growth in the final quarter and growth by 1-1.5
percent in 2010, and 3.5 percent in 2011 and 2012.
Britain's ballooning public sector borrowing requirement (PSBR), its annual borrowings to keep functioning, was revised up to 178 billion pounds
(about 287 billion U.S. dollars) for this year, and also raised for next year to 176 billion pounds (about 284 billion dollars). Darling said the PSBR for 2011 would be 140 billion pounds (about 226 billion dollars) and would decline to 82 billion pounds (about 132 billion dollars) for 2014-15. But he did not print a roadmap of how he was going to get there. He did announce the expected return to 17.5 percent Value Added Tax,
cut a year ago to 15 percent to stimulate growth amid the worst of the financial crisis, and he announced an extra 0.5 percent on National
Insurance (used to pay for the National Health Service). This will join a 0.5-percent increase already announced and will take effect in April next year. In effect it is increasing income tax by 1 percent.
Experts say much more needs to be done to cut the deficit, but many feel that before the election no politician is likely to detail how large the necessary cuts will be and where they will fall.
ICM's poll did not find much enthusiasm for Darling's PBR. But voters liked his tax on bankers' bonuses. But only 12 percent of people thought the PBR was a step in the right direction, with 19 percent saying it would make
things worse.
Brown and Darling's two opponents, Conservative leader David Cameron and shadow chancellor George Osborne, were felt by poll respondents to be better at managing the economy -- by 38 percent to Brown and Darling's 31
percent. But this was down from an 18- point gap two months ago.
The UK Consumer Confidence Survey from GfK NOP was conducted using a sample of 2,000 adults between Dec. 4-13, with a +/-2 percent margin of
error.
It may be that these figures don't just show that consumer confidence has declined in the past two months -- it seems that Labor's political
confidence has been hit too.