Gráinne Gilmore, Economics Correspondent
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Fears that consumer spending will slump in the coming months are set to rise today after a report showing that two thirds of Britons believe that the country is in recession.
The consumer confidence index of the British Retail Consortium (BRC) shows that 65 per cent of consumers believe that the country is in recession and 34 per cent predict a global recession in the next 12 months. This comes as consumer confidence has hit a record low.
The BRC said that the index fell to 79 this year as financial pressures spiral and house prices slide. That is down from 91 last year and is the lowest since the survey started in 2003.
The biggest worry among consumers was the outlook for the economy, with nearly one in five people saying that it was their main concern, the BRC said.
Debt came a close second, with 16 per cent of people saying that it was their primary worry.
One in five people questioned had no spare cash and 57 per cent said that they felt bad or not so good about their personal finances. Three in five were negative about their job prospects over the next year.
An economy is classed as being in recession when it shrinks for six consecutive months. Britain's economy is still growing, according to the most recent figures, released in March. GDP, the measure of economic growth, rose by 0.4 per cent in the first three months of the year.
However, this was down from 0.6percent in the previous quarter and marked the slowest expansion since the start of 2005.
Some economists say that there is a risk that the economy will fall into recession next year.
Howard Archer, of Global Insight, an economic consultancy, said he was not surprised that people believed that the UK was in recession.
He said: “The economy has slowed down suddenly, so it may feel like a recession, even though it isn't technically the case. In addition, people are seeing their bills rise and are really feeling the effects of the credit crunch.”
However, the Bank of England, which was persuaded not to cut rates last week by increasing inflationary pressures, will take some comfort from the report, which says that more than half of consumers consider inflation to be the biggest risk when the economy is slowing.
About 55 per cent of people said that inflation was their main concern during an economic downturn, and 39 per cent considered rises in interest rates to be the biggest risk.
The gloomy outlook has boosted the popularity of savings, with more people choosing to put their spare cash in a savings account rather than spending it on holidays, clothes or entertainment.
About 37 per cent of people said that they would save their extra money rather than spend it, compared with 32 per cent in October 2006.
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watch out next year another boost in house prices is around the corner because many homeowners are taking their houses of the market and the buy to let landlords are now going to increase their rents, . Home owners will not sale and rent as thought previously because it wont be cheaper. A new era
CHRISTOPHER, KENT, UK
does it really matter what two thirds of the people think?no of course not, as long as we have our corrupt rich greedy politicians to tell us otherwise we should have no worries.
trust the politicians.they would never let us down!!! would they???
ebbi britt, valencia, spain
I still think the entire UK should migrate.
They can't tax anyone then can they!
Ok, so we will all have to find new jobs, but it's better than living in a crap country where the government want all our money.
Seetal Udeshi, London, UK,
What a daft poll.Why ask Joe Bloggs if he "thinks" we're in recession?We either are or we're not!Is consumer confidence low?Yes.Is the outlook for the economy a cause for concern?Yes.Are we in a recession?No.It's not the same thing.This just fuels anxiety.Why not ask if we "think" we're in France...
Phil, London,
A lot of people in this country work extremely hard, only to have their hard earned money taken from them by a GOV that to say the least is an 'ABSOLUTE DISGRACE'.
The people of this country look upon THE GOV as a STANDING JOKE.
ONE GROUP OF LIARS, PERIODICALLY REPLACED BY ANOTHER GROUP OF LIARS.
Guru, Harrogate, England
Of course the country is in a recession. It is harder for people to get a job, prices are going up while wages in real terms are falling. Retail is down, unemployment has begun to rise, and the house price figures for May will be very serious indeed. The present government is hopelessly incompetent.
Ian, Bristol,
Let's all say were in recession , stick interest rates up , let those fall who have to , let the housing market crash and let's start again. There will be loser's and winner's but any correction in the market never last's long.
The underclass won't moan because they are unemployed from last time.
Nick Dixon, Sutton Coldfield, England
There is an old joke among economists that states:
A recession is when your neighbour loses his job. A depression is when YOU lose your job.
Inflation is the big enemy, If we price ourselves out, there will be a lot of depressed people around. We need to take the medicine, need an interest rate RISE
Brian Roberts , Plymouth, Devon
I am surprised its only two thirds. If GDP was a reliable measure, Zimbabwe would be top of the table. Its sterling's value that matters. Unless there are major cuts in public spending we are in for a downward spiral & the BoE will need to increase rates to compensate
Steve Marchant, Broadhempston, UK
INFLATION, INFLATION, INFLATION is causing everything we see plus a small amount of increased demand. Let us be clear, prices are not going up, our currency is loosing value so it takes more money to service our debt etc. We are heading for a depression and the housing market will be a disaster.
Steve, Edgware, UK
Individual behaviour matters more than the wider ecomony.
Spending is being cut back as choices are limited now that rising fuel costs affect even non-drivers (domestic fuel bills) and with rising mortgage costs,
Orange are right, the future's no longer bright.
No more boom & bust Gordon?
Barrat, Newcastle,
A consumer 'slowdown' is what this country has needed for at least the past seven or eight years. If you spend more than you earn, then it is time to pay off your debts, the so-called 'credit crunch' being the long overdue medicine. Inflation however we can happily do without, thankyou.
Paul, Coventry,
"In addition, people are seeing their bills rise and are really feeling the effects of the credit crunch.
No, they are feeling the effects of s devalued Dollar and pound, combined with financials and investors speculating on commodities. People literally starving to feed the greed.
Yorkie, Amsterdam,
With a £1.4 trillion debt mountain to clear coupled with rising prices and low wage inflation,its hardly surprising that people are concerned.A lot of people are right to be concerned.I cannot see where the money is going to come from for growth to continue now that the banks have stopped lending.
stephen hulton, eure, france
The rate of growth in Inflation is now quite pronounced and rate of increase in the price of food,petrol,Council Tax, Mortgages ,Gas and Electricity is accelerating faster than the quoted Inflation Rate,which is a "lagging indicator".To control Inflation we need to increase Interest Rates.TOUGH !!!
Ed Corbett, bridgend, wales
There is a lot of scare-mongering. I expect like SARS, bird-flu and MMR, we shall suddenly find that all the sound and fury from the press signified nothing. The press campaign against MMR put loads of children at risk. Their scaremongering on the economy is likely to talk us into a recession
Alyssa, Southampton, UK
luckily we are led by men of vision,whose wisdom and actions
will be proven right.
stupid is that stupid does
dave, northwood,
The way things are going its looking very bleak for many people,a recession could be on the cards here.
martin, sheffield, uk