Stock market turbulence fails to spoil Britons' appetite for spending
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Your support makes all the difference.Britons' optimism over the prospects for their household finances is at the highest level ever recorded, according to a survey today.
Stock market turbulence and the possibility of war with Iraq have so far failed to dent their expectations, Consumer Futures said. The upbeat attitude among consumers will undermine forecasts that the consumer boom has come to an end.
Richard Holt, the director of Consumer Futures, said: "This buoyant optimism is reflected in the high proportion of those who think now is a good time to make a major purchase like a car, computer, TV, washing machine, fridge or freezer."
This may be reflected in official retail sales figures tomorrow, which are expected to show another healthy rise in September after falls in early summer.
Mr Holt said he expected spending to rise by 4.7 per cent this year compared with 4.5 per cent in 2001. "The outlook for consumer spending is positive," he said.
But the report also highlighted a small fall in consumers' confidence, which it said would eventually lead to a slowdown in the growth rate consumer spending next year to 4.4 per cent.
All regions of the UK except East Anglia suffered a fall, with the sharpest declines in London and the Home Counties.
"Our view of slower spending growth largely reflects our belief that confidence is likely to continue falling over the coming months," Mr Holt said.
However, its detailed breakdown showed certain sectors would suffer a dramatic slump in sales. Growth in spending on durable goods is expected to drop to 1.0 per cent next year from 5.5 per cent in 2003.
"The impact of slower spending growth will be felt most by retailers of luxury products and big-ticket items," Consumer Futures said.
Household spending has remained strong in the face of the economic slowdown thanks to continued high levels of unemployment and interest rates at a 40-year low, analysts believe.
Meanwhile, a leading economic indicator fell in September to its lowest level since April 2001 suggesting the current business cycle would peak in the final quarter of this year. NTC Research said yesterday the indicator was depressed by falls in non-financial shares but offset by rises in consumer credit and new car registrations.
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