Tax fears spark gloomy consumer outlook
Nationwide Building Society says concerns about VAT and National Insurance rises have dented consumer confidence
Tax hike fears sent consumer confidence down sharply in December, according
A study by the building society observed a five-point drop due to worries
about National Insurance rises announced in the pre-Budget report and the VAT
rate returning to 17.5%.
“The five point fall in confidence in December suggests that an element of
caution may have begun to creep back into the minds of consumers over the
Christmas period,” said Martin Gahbauer, Nationwide chief economist.
“This comes at the end of a positive year for the index, which gained some
upwards momentum in 2009 to help claw its way up from the record low seen in
“However, the looming VAT hike and other tax changes announced in the
pre-Budget report may have impacted on confidence in December, forcing people to
review their expectations for the future.”