Research, conducted by YouGov on behalf of Willis Owen, found that half (50%) of people are less confident about the outlook for the UK economy than they were in February last year. Just over one in six of the population (18%) says they are more confident. As a result more than four in ten (43%) plan to spend less with just 2% planning to spend more in 2011. While nearly a fifth (17%) of people plan to save and invest more during 2011.
As a result of the research, Willis Owen warned against any rapid rises to interest rates in an attempt to bring inflation under control.
Commenting, Alan Easter, director of Willis Owen, said: "It is clear that falling consumer confidence is going to hit spending this year. The danger is that we end up in a downward spiral with falling confidence and consumer cutbacks sinking the economy still further. A consumer led recovery is looking unlikely, particularly with fears over employment and the full impact of the spending cuts yet to hit home.
"This should serve as a clear warning to the Government and the Bank of England that any further shocks to the economy will send consumers even further into their shells. While it may not be good news for those with cash savings we need to continue this period of low interest rates, for at least the next 12 months. And with almost three quarters (71%) of people saying that Government spending cuts and wider policy is a critical factor affecting their confidence in the economy the Chancellor should be extremely wary of making further cutbacks in the upcoming budget."
