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News: Consumer confidence takes nosedive

Job security fears have battered the confidence of UK workers, according to October's Consumer Barometer from Lloyds TSB Financial Markets. The balance of consumers feeling optimistic about their own job security and employment prospects for the UK as a whole is the lowest since the survey began 12 months ago.

Indeed, just 14% of workers think the UK's employment picture looks rosier today than this time last year, compared with 35% who are more pessimistic about the nation's jobs situation. In addition, only 19% of people feel their own job is more secure than a year ago - compared with 24% who are increasingly pessimistic about their individual job security.

The barometer also shows that an increasing number of consumers expect interest rates to rise over the next 12 months, with 59% believing rates will increase and just 14% still believing there'll be a cut. This compares to 51% and 21%, respectively, for August - the survey's lowest point - which equates to a rise from +30 to +45 in the balance of people expecting the worst.

Trevor Williams chief economist at Lloyds TSB Financial Markets makes the point that consumers' inflation expectations remain above the average for the life of the survey - this being illustrated by the majority of consumers believing prices are rising quickly and will continue to do so.

With official data showing annual CPI inflation picking up for the fourth month in a row in September, to an eight-year high of 2.5%, it looks like consumer fears are warranted. This will worry the Bank of England, as increasing inflation expectations amongst consumers will make their job of hitting the inflation target harder, he argues.

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