No upturn for consumer spending

RISING unemployment and steep falls in house prices are likely to curb consumer spending for at least the next three years, the Henley Centre forecast yesterday.

Henley said that of the 23 million households in Britain only 9 million, or 40 per cent, could be seen as 'potentially attractive targets' for business and the number was unlikely to rise much before 1995.

Henley said consumer spending was being curbed not only by unemployment, but by fear of unemployment and rising debt burdens. The loss of equity experienced by homeowners had been significantly underestimated.

Henley said the number of people who believe that their homes are worth less than when they bought them is estimated at 900,000. But in reality 'the true figure is much higher, and there is a deep-rooted reluctance by homeowners to accept that their wealth has deteriorated', Henley said.

'The true impact of equity loss will not be realised until the market picks up and people try to sell their houses.'

Henley research also shows that unemployment directly affects 2.7 million households, but a further 5.7 million homes are curbing their spending because of fear of unemployment.

About 46,000 businesses failed in the first nine months of the year compared with 48,000 for the whole of 1991, according to NCM Credit, the Cardiff-based insurance company. NCM predicts that the toll for 1992 will be 60,000 failures and that small companies will suffer more than most.