Consumer confidence improved in August

The GfK/NOP consumer confidence barometer showed an improvement to -18 in August from -22 in July. This is a slight improvement on analyst's expectations of a -24 reading for the very useful and often very volatile barometer of consumer confidence. So where does this leave the UK economy in the short to medium term?

A number of analysts believe that the slight improvement in August is nothing but a rebalancing of the disappointing July figure with underlying concerns about the UK economy still more than evident in some areas of the UK consumer market. The sad truth is that budget cuts and tax increases have yet to really hit home with regards to the UK economy and once consumers and businesses feel the inevitable pinch then we will see the "real" consumer confidence figure.

As we have commented upon on a number of occasions, it is proving very difficult to keep track of the UK economy, consumer confidence, net lending in the UK and business confidence. Different surveys appear to give very different indications of the underlying situation making it almost impossible to forecast any distance into the future with any real confidence. This is one of the major issues facing the Bank of England and the UK government.