Consumer confidence dropped 5 points in the run up to Christmas as a result of renewed concerns about unemployment, according to a new survey by Espirito Santo.
The worst falls were for those in the mortgage-holding higher income bracket, which saw an 11 point drop. Inflation continues to be the main factor in the confidence drop, but the increase in fear of unemployment, particularly in the public sector, has exacerbated the overall figure.
This comes on the back of a two year pre-Christmas dip in confidence following the Autumn statement.
But Espirito Santo said it expected Christmas spend to be largely protected, with the survey suggesting the average spend had risen from £370 in 2011 to £373.
As a result, Espirito Santo said it was “cautious” about the outlook for general retail in 2013, and has downgraded its recommendation to neutral.
In an analyst note Caroline Gulliver said: “We are hopeful that the recent fall in confidence will prove short lived, but because the UK general retail sector rallied 25% in 2012, outperforming the market by 15%, we do not see as much scope to outperform again in 2013.
“There are some tailwinds such as lower cotton prices, easy comps from last year’s poor spring weather and the exit of Comet but we believe that, on the whole, the market has already taken into account these factors.”