Improvement in consumer confidence levels

Recent reports have shown that there have been improvements in consumer confidence levels for the second month in a row. It is thought that action such as aggressive interest rate cuts from the Bank of England and a cut in VAT from the government may have helped to restore some level of consumer confidence.

Over the past year consumer confidence levels have gone through the floor as a result of the global credit crunch, falling house prices, the state of the housing market, rocketing inflation, and high living costs such as food, petrol, and energy bills. Even though consumer confidence has gone up for two months in a row it is still close to record lows.

One industry official stated: “The Consumer Confidence Index has improved again this month after the interest rate cut and the drop in petrol prices, but continues to hover at near record lows.” She added: “The crucial question is whether the improvement in this index will be translated into activity on the High Street during the January sales.”

Over the past few months the base interest rate has plummeted to just 2 percent, which is almost two thirds lower than November last year. VAT was also cut by the government recently from 17.5 percent to 15 percent, as government officials try and boost the economy.