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UK consumer spending could soon dip sharply

Staff Writer |
UK consumer confidence dipped again in November and economists warned this could soon seen consumers tightening their belts and removing a key driver of the economy.

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A European Commission report showed consumer confidence decelerated this month, contrary to a modest rise shown in a rival report by YouGov/Centre for Economic and Business Research (CEBR).

The Commission's index of consumer confidence dipped to a three-month low of -6.9 in November from -3.3 in October and -1.7 in September, having rebounded from lows of -7.5 in August and -9.2 in July after the Brexit vote.

EC data also showed UK inflation expectations surged in November, with the balance of respondents expecting prices to rise over next 12 months spiking to +38.7 in November from +18.1 in October.

The EC's economic sentiment index (ESI) for the UK rose to 107.3 in November from 105.8 in October.

Meanwhile, the YouGov/CEBR consumer confidence index showed a rise to 109.4 in November from 109.1 in October.

November's second successive dip in the EC consumer confidence measure stoked suspicion "that the economy will be hampered by markedly softer consumer spending during 2017 as the fundamentals for consumers deteriorate", said economist Howard Archer at IHS Markit, which was particularly significant as consumer spending has been a key growth driver for the UK economy in the third quarter.

Although employment and purchasing power conditions are currently still decent for UK consumers, Archer said their confidence was "undoubtedly adversely affected in November by sterling's weakness stoking concerns about rising inflation, the economy and personal finances".

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