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Consumers less happy about money prospects

CONSUMERS were already becoming more pessimistic about prospects for the economy and their own finances before last week's rise in interest rates, according to the latest survey by Gallup for the European Commission, writes Robert Chote.

Analysts believe last week's increase in base rates, which yesterday saw the Halifax Building Society put up its mortgage rates, will have dealt consumer confidence a further blow. With the lagged impact of tax increases, this could further slow the growth of high street spending.

Some 19 per cent of consumers questioned in the first two weeks of September expected the financial position of their household to improve in the coming year, against 31 per cent expecting it to get worse. The net balance of 12 per cent expecting their finances to deteriorate was a more pessimistic response than in August but better than in any other month since January.

A net 3 per cent of consumers expect the economy as a whole to worsen in the coming year, a slightly more pessimistic response than last month but the third most optimistic this year. There has been little change in opinions on the likely path of inflation and unemployment in the next year.

The number of people believing it a good time to buy expensive items was little changed on last month, as was the balance of people expecting to save money in the coming year.