Consumers in the U.K. became less pessimistic about the outlook for the economic recovery in the last month of 2010 despite looming budget cuts, according to The Daily Telegraph. On Tuesday, Nationwide found its consumer confidence index moved up to 53 in December from 45 the month before, which marks the first improvement in sentiment among Britons in four months. Nonetheless, the index was still 24 points below the level seen at the beginning of 2010, and the gain was driven predominantly by people feeling less pessimistic rather than due to growing optimism.
The report found that the present situation index added three points to reach 24 while the spending index both rose 10 points, although the spending index gain may have been due to the looming value-added tax increase. Meanwhile, a separate report from Lombard Street Research forecasts that it will become harder for first-time home buyers to purchase a property in the first six months of the year despite home prices sitting at the most undervalued level in about 15 years. The index of housing affordability rose to 116.7 in the third quarter compared to the historical average of 100, although the report said mortgage lending is “tighter than it was six months ago.”
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