British consumer confidence declined for the fifth straight month in July, with consumers growing more cautious of the outlook for the economy and their personal finances, the results of a closely watched survey showed on Friday. The deteriorating confidence raises the risk of the economy slumping to a double-dip recession.

Market research firm GfK NOP said its consumer confidence index slid to -22 in July from -19 in the previous month. Analysts had expected the sentiment indicator to fall to -20. The annual moving average of the consumer sentiment index remained unchanged at -18.

"Given that consumer confidence measures are normally good predictors of what the economy itself will do a few months later, the continuing slide of the index makes a double-dip recession look more of a possibility as each month goes by," said Nick Moon, managing director of GfK NOP. "It's possible that respondents are already factoring into their view of the economy over the next 12 months the likely recessionary impact of the government's announcement about the level of spending cuts it wishes to make, but if they are not then the prognosis is even more gloomy."

Three of the five components of the consumer confidence index deteriorated in July. The sub-index measuring general economic situation over the next 12 months slid to -25 from -12 in the preceding month, while the sub-index measuring general economic situation over the last 12 months fell to -48 from -46.

The sub-index assessing consumers' personal financial situation over the next 12 months declined to -6 from -2 while that assessing the financial situation over the last 12 months was unchanged at -14. The sub-index measuring the climate for major purchases rose to -16 from -24.

Moon said the rise in the rise in the climate for major purchases index could be a correction, as the indicator was the biggest faller in June's index. Consumers could also be pushing forward purchases before the VAT rate goes up, he added.

GfK NOP's data chimes with that of Nationwide, which recorded deteriorating confidence in June. The building society's indicator dropped to 63 from 66 in the previous month.

The U.K. economy grew 1.1% between April and June, the fast rate of quarterly expansion in four years. But analysts do not expect the rapid growth to be sustained, with the government's austerity measures taking effect.

Earlier in the week, the Ernst & Young ITEM Club downgraded its economic growth outlook for the U.K. for the next three years, blaming fiscal tightening. The Conservative - Liberal Democrat coalition's budget targets an acceleration in the reduction of Britain's sizable public deficit, with GBP 6.2 billion of public spending cuts planned for this year. But there are fears that a sharp budget belt-tightening could pose risks to an economic recovery that is still fragile.

The U.K. has the third largest budget deficit in the European Union at 11.5% of gross domestic product.
British consumer confidence declined for the fifth straight month in July, with consumers growing more cautious of the outlook for the economy and their personal finances, the results of a closely watched survey showed on Friday. The deteriorating confidence raises the risk of the economy slumping to a double-dip recession. (Market News Provided by RTTNews)