Confidence takes an austerity knock

Some 600,000 public sector workers are expected to lose their jobs in the next five years, 150,000 more than under Labour's plans, while the higher rate of VAT will hit households in the wallet.
Some 86pc of respondents to the Markit/YouGov Household Finance Index expect the cost of living to rise in the next 12 months, a record high. At the same time, there has been the sharpest drop in confidence in job security in the private sector for 13 months, "suggesting the impact of Government spending cuts has reverberated beyond the public sector", the report said. Respondents also estimated that the value of their properties fell in August, as the research scored its lowest reading for 13 months.
The lack of confidence came despite upbeat recent retail sales figures and forecasts that GDP growth this week will be left unrevised at a strong 1.1pc.
It also flew in the face of resilient business numbers. The ICAEW/Grant Thornton UK Business Confidence Monitor found that companies posted positive turnover and profit growth in the past three months for the first time since the start of 2009, and expect to increase staff numbers in the next year by 1.1pc. Staff numbers have been falling for 18 months.
Despite the good data, business confidence remains low. The monitor found that confidence declined from +25.5 to +21.5 in the quarter and that companies expect to increase prices by only 0.9pc in the next 12 months. Salary growth in the next year is only expected to be modest, at 1.5pc, below inflation of 2pc and 3pc – explaining workers' fears about the rising cost of living.
Tim Moore, economist at Markit said: "Stronger growth in the UK economy has done little to put a floor under the downturn in household finances."
Michael Izza, chief executive of ICAEW, said: "UK businesses that came through the recession are now facing the challenge of surviving the recovery."
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