Accounting scandals 'hit consumer confidence'

Accounting scandals and stock market slides have hit consumer confidence, sending optimism to its lowest level this year, a survey revealed today.

The report, by market research firm Martin Hamblin GfK on behalf of the European Commission, showed its index slid by four points in July to stand at just plus two – its worst since December 2001.

On the index, a positive figure indicates optimism while a negative figure shows a lack of confidence.

Martin Hamblin said: “It is expected that this decrease in confidence is as a result of the US accounting scandals that have rocked stock markets across the globe.”

The monthly survey of more than 2,000 people showed of its five key measures of confidence only one had risen – which related to people’s expectations of the future of their personal finances.

Martin Hamblin said it seemed that while consumers were aware of the impact falling share prices would have on the general economy, they were not associating this with their own personal finances.

Optimism about making major purchases fell, as did perceptions of the development of the general economic situation, and expectations for the future of the general economic situation.

However, while expectations about personal finances rose, people’s perceptions of the current savings climate fell back.

An increasing number of people believed it was an unfavourable time to save, and a rising number of people thought it unlikely they would be able to save any money over the next year.

“This result is unsurprising following the Bank of England’s decision earlier this month to maintain interest rates at 4% and the decreasing value of the stock market,” Martin Hamblin said.

The survey comes ahead of the Bank of England’s interest rate decision this week. Economists are expecting rates to be held at 4%.