U.K. consumer confidence stayed at a four-month low in December as Britons prepared for the biggest fiscal squeeze since World War II, GfK NOP said. The index of sentiment was at minus 21, unchanged from November, which was the lowest level since July, the research group said in a statement in London today. Economists predicted a fall to minus 22, according to the median of 14 forecasts in a Bloomberg News survey. A measure of the general economic situation over the next 12 months fell one point to minus 23. Prime Minister David Cameron’s government is preparing to cut spending and raising taxes to eradicate a record budget deficit. Value-added tax on sales will rise to 20 percent from 17.5 percent in January, prompting many consumers to bring forward purchases to avoid the extra charge. Consumers’ belief it was a good time to buy before the VAT increase “distorted the overall index to make it appear static when in fact it is teetering on the brink,” GfK NOP Social Research Managing Director Nick Moon said in the statement. “The real test will come in January when festive spending ceases and the VAT increase comes in. Then we will finally see the full impact of how consumers are reacting to the first wave of austerity measures.” The gauge on the climate for making major purchases rose 10 points to minus 7, the only one of the index’s five elements to have risen this month. A measure of Britons’ views on their personal finances for the coming 12 months fell 1 point to minus 8, and a gauge for the last year declined 3 points to minus 16. Officials have warned the austerity measures may hurt Britain’s economic recovery. The Office for Budget Responsibility, the government’s fiscal watchdog, on Nov. 29 cut its 2011 growth forecast to 2.1 percent from 2.3 percent and its 2012 projection to 2.6 percent from 2.8 percent. An assessment of the general economic situation in the last 12 months dropped 5 points to minus 51. GfK NOP conducted the survey of 2,007 people from Dec. 3 to Dec. 12. The research was carried out on behalf of the European Commission. To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net. To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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