More bad news: confidence keeps falling

8:55 am - April 28th 2011

by Sunny Hundal    

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Well, what do you know? Turns out promising austerity, deep cuts and threats of high unemployment doesn’t make people feel confident about the future.

New figures out today by GfK NOP show consumer confidence fell sharply during April.

They say all five of the measures of consumer confidence they track dropped, sliding to -31. It was at -16 in April last year.

The graph below shows how confidence had fallen up to March. The numbers for April are worse.

GfK NOP say it is only the third time the index has dropped below minus 30 in the survey’s 37-year history, with the previous two occasions being in early 1990 and mid-2008.

Nick Moon, managing director of GfK NOP Social Research, says:

Coming after six months of stagnant economic growth, this is a significant drop – one that is bad news for the Government and bad news for the economy.

It suggests that the attempts to spur growth in last month’s Budget have failed to convince the public, and this may well be sorely felt on the already beleaguered high street.

It is particularly striking that all five areas of the index fell this month, pointing towards growing gloom as we head into summer. These figures must make the possibility of a double dip recession increasingly real.

Partly from a press release

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments

Just who is scaremongering and promoting bad news now?

It’s hardly surprising that after an extensive media campaign against the government’s economic policies people are worried.

It’s sad to see misinformation pumped out day after day.

2. Cynical/Realist?

Ahhhhh, it’s the extensive media campaign (in all those left-wing papers the general public flocks to buy each morning no doubt) that’s causing the economy to suffer, not the economic policies themselves.

Glad thats cleared up now – I’ll be a happy camper from now on I promise.

@2 on another page Sunny complains about the government’s scaremongering about the economy. Here he publishes a part of a press release designed to grab media attention by focusing on nebulous measures of consumer confidence.

It’s hypocrisy plain and simple.

Why it’s sad is that there is a different story to tell about the UK economy. One where the economy is changing, driven by longer-term dynamics in both the country and the globe, managed and mis-managed by the bigger actors (the state, corporations etc), as well as contingency. I work in that field.

Precisely none of this is reflected in the garbage I read in the newspapers. The vast majority of economic news published is driven by perceived short-term political gain of those promulgating the news (see above).

.@ AnotherTom

I don’t think there is anything inconsistent from Sunny in saying the government have been indulging in scaremongering and then posting evidence of the effect of that scaremongering. Expectations really do matter and the leaders of the government are almost equal with the governor of the BoE in their influence on expectations.

@5 there is a danger here of semantic arguments based on different bullsh*t but here goes anyway.

So, Sunny can make strident accusations against the government about their scaremongering but when he does it himself (and republishing press releases from commercial organisations is the epitome of such a tactic) this is OK because this somehow measures the effect of the government’s behaviour?

Please. It’s much simpler than that.

It’s “scaremongering” when it’s done by someone Sunny doesn’t like and says something he doesn’t like to hear. It’s useful information when it has the effect he wants.

This is the world we live in but it sticks in my throat when it’s done in the name of idealism.

7. Charles Wheeler

“Turns out promising austerity, deep cuts and threats of high unemployment doesn’t make people feel confident about the future.”

It’s almost as though the govt. wants an economic downturn as an excuse for further cuts. . .

They are in the paradoxical position that an upturn in the economy and confidence/expectations will undermine the justification for further cuts. A pessimistic outlook is essential to scare people into acceptance.

A growing economy and shrinking deficit might bring short-term popularity, but would be counter-productive to the long-term aim of dismantling public services which depends on prolonged austerity.

@ 6. AnotherTom

There is a rather big difference between what a blogger says and what government ministers say. The language of government ministers does have a conscious and subconscious effect on the economy. An example of the expectations effect is central bank officials will seek to adopt as neutral or ambiguous language as they can muster. There are whole teams of analysts employed to interpret and look for changes in the language of the central bank. Of course, if they want to send a more explicit signal about their intentions they adopt more unambiguous language.

@8 In terms of whether someone is being a hypocrite, it doesn’t matter whether they are a lowly blogger or a government minister.

Moreover – and to your latter point, and as I have written elsewhere on this site today – the government’s warnings on the economy have been largely focused on the limitations of the state to be able to continue borrowing without a crisis and so there is a need for spending restraint.

This discourse / frame has been turned around by Labour and the Left as “austerity” and “cuts”, to suit their (statist) political agenda. Sympathetic aspiring politicians and opinion formers such as Sunny can claim spots in the pages of the Guardian and other career-advancing positions if they adhere to this framing of the government’s policies. This framing of the debate has been picked up by sympathetic media, partly because cuts are more tangible than a debt crisis (despite the largest debt crisis in history being a mere 2.5 years ago).

It has been Labour and the Left which fill our TV screens and newpapers with apocalyptic warnings of the effects of the cuts. It has been the government warning of the apocalyptic consequences of a debt crisis. There is a difference.

So what can we conclude?

Financial journalism in this country is sh*t.
Aspiring opinion formers will say and believe whatever they need to if it advances their position.
The government may be wrong on a potential debt crisis but “scaremongering” on debt is just as valid as scaremongering on cuts.

“Turns out promising austerity, deep cuts and threats of high unemployment doesn’t make people feel confident about the future”

Could you point to the elements in the survey that support the causal relationship you’re claiming?

Most people aren’t too bullish. Most people also think curbs on public spending on the scale the Government plans is necessary. Obviously we don’t know how closely these majorities map, but it suggests that surveyees may be capable of judging that something is both necessary and unpleasant.

And if they think that it’s necessary, is it likely that they’d be more bullish if they knew it wasn’t going to happen? Or would they smell a rat?

The economy is struggling because it hasn’t been purged of all the malinvestments created during the boom. What it needs is a short sharp shock (created by ramming up interest rates) which may result in a short-term double dip but which will sow the seeds for recovery. Such a policy would not be politically possible though.

Reactions: Twitter, blogs
  1. Liberal Conspiracy

    More bad news: consumer confidence keeps falling

  2. Soho Politico

    RT @libcon: More bad news: consumer confidence keeps falling

  3. sunny hundal

    More big bad news: survey shows consumer confidence keeps falling. Turns out budget didn't make people confident:

  4. Dan McCurry

    More bad news: consumer confidence keeps falling | Liberal Conspiracy via @libcon

  5. jennifer roberts

    RT @libcon: More bad news: consumer confidence keeps falling

  6. Porgy The Cat

    RT @libcon: More bad news: consumer confidence keeps falling

  7. ‘Staged’ cracks in the coalition, debate over new GDP figures, and Cameron’s ‘Dear’ moment: Political blog round up for 23 – 30 April 2011 | British Politics and Policy at LSE

    […] George Osborne’s plans are not working, and Sunny Hundal at Liberal Consipiracy charts the recent falls in consumer confidence.Richard Excell at the TUC’s Touchstone Blog says that the figures mean there is no cause for […]

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