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Spending confidence picks up in March

Published: 14 April 2011
Nationwide Spending Index reports an increase for the first time since the VAT increase, with overall consumer confidence also up five points, but figures still lag behind pre-recession levels.
Spending confidence picks up in March
The Spending Index, which records whether consumers judge this a good time to make household purchases, rose to 66 points last month - up 13 points from the record low recorded in February.

Nationwide's chief economist Robert Gardner said: "Consumers assessed that March was a slightly better time to be buying household goods or to make a major purchase... Notably this is the first increase in spending sentiment since the introduction of the 20% VAT rate in January - perhaps an indication that consumers are adjusting to the impact this is having on their own finances."

Overall consumer confidence rose by five points in March, boosted by slightly more optimistic views about the future, but failed to reverse the significant falls seen in February. Nearly 60% of consumers believe conditions will be the same or better in six months' time. However, this is still well below the 81% of consumers who felt the same way this time last year.

Mr Gardner added: "After a fairly dismal start to the year, there was some respite in March, with consumer confidence picking up from the record lows seen in February. While this is a welcome change in direction, we must remember that the Index remains at a historically low level, and the up tick in March failed to reverse the fall suffered in the previous month... We will need to see a succession of increases before we can say that confidence has returned anywhere close to pre-recession levels."

He continued: "It is far more likely that confidence will remain subdued for several months yet until the economy gains greater momentum."

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