Consumer confidence in the U.K. took the biggest hit in nearly two decades during the first month of 2011 as the looming spending cuts are seen as being poised to destabilize the uneven economic recovery, according to The Daily Telegraph. On Friday, the GfK NOP index of consumer confidence was reported to have dropped eight points in January to reach -29, which is the lowest level since March 2009 and the fall was the steepest monthly decline since 1992. The group called the plunge an “astonishing collapse” and cited austerity measures and the value-added tax as the principle reasons for the gloomy sentiment.
The managing director of GfK NOP, Nick Moon, warned, “Today’s figures, when combined with the bleak economic forecast, will make talk of a double-dip recession unavoidable.” Within the report, the biggest drop in confidence was seen in demand for major purchases as the VAT rose to 20% at the beginning of the month, and the survey also showed increased pessimism about both the state of personal and country-wide finances in both the past and the future. Furthermore, the data was collected before the latest government data showed a surprising economic contraction in the fourth quarter of last year.