Confidence Rebounds in the British Economy Based on GFK Survey

Confidence is finally starting to spread throughout the United Kingdom as Britons are looking forward to the new measurements taken by the government and the central bank that will halt the downfall of the nation as they continue to face a prolonged recession.

GFK NOP released its consumer confidence in which it came in at -30 higher than both the prior and expected readings of -35 respectively. This rise in the readings although still a historic low but yet the second consecutive incline which is surprising the markets especially as it marked the highest since May of 2008.

The Bank of England took interest rates down to 0.50 percent the lowest on records as a way to shore economic growth and avoid deflation risks that the nation faces. With lower interest rates encourages more lending and helps restore stability. Also banks began recently to buy gilts using newly printed money as way to provide tranquility in the financial markets while lowering borrowing costs.

With the latest efforts taken by officials boosts confidence levels as now the markets are expecting a recovery to take place during next year yet the outlook for this year is not bright especially as the UK contracted by 1.6 percent in the fourth quarter of 2008 marking the worst quarter of contraction since 1980.

Taking the survey into details we saw that Britons are looking forward to the upcoming 12 months as alongside with the survey was released an index gauging the confidence about the upcoming months which inclined 7 points to remain at -31. Also there was climate for major purchases showing that it slightly rose one point to -23.

For an overall picture, the confidence rising means that conditions are improving but a slow pace especially as this week the main sectors that fuel economic growth, manufacturing, construction and service representing 15%, 6% and 75% respectively of gross domestic product are easing their downwards slide.

As the BoE is using unorthodox measures, the government might introduce another economic stimulus when its new budget is announced on April 22nd, yet the government is hazardous about bringing forward another stimulus as they want to wait for the latest measures taken to see their effect on the economy before applying another one.

Prime Minster Gordon Brown is doing all he can to win back Britons popularity since lately he is dealing with the highest unemployment since 1971 standing at 6.5% while there is tightened credit conditions alongside falling home values. In my opinion, Brown has already let down too many people to try and gain back their confidence now before elections.

The deterioration in the British economy is finally slowing down while today we see that the biggest retail clothing store, Marks & Spencer posting smaller than projected sales which helped the UK stock markets rise along with Compass Group, the biggest food services provider to hospitals, companies and schools also reported rising sales. As of 09:36 GMT we see that the FTSE 100 Index rose 81.11 points or 2.16% to 3,844.02 points.

Ecpulse

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