London, United Kingdom (PressExposure) January 14, 2010 -- British retailers expecting a quick return to the halcyon days of credit-fueled consumption could be in for a rude awakening. That's apparently the view of analysts at Asian-based investment house, "Zen International".
Figures released today by the Nationwide Building Society showed that confidence among consumers in Europe's second biggest economy had fallen sharply as expectations for the economy continued to deteriorate.
A source close to "Zen International" said that consumers were wary of imminent tax hikes likely to be implemented to help curb Britain's record budget deficit which is danger of helping the nation lose its AAA credit rating and joining the likes of Ireland, Spain and Greece in the second division of international sovereign creditworthiness.
This month, VAT returned to 17.5 percent from 15 percent, reversing a year-old measure. The Conservative opposition had a 10 percentage-point lead over Brown's Labour Party in a YouGov poll released Jan. 1 despite the Prime Minister's efforts to revive the economy in time for an election that must be held this year.
"Zen International" said that the UK remains the only major economy still in recession and blames the high levels of indebtedness among consumers. The firm believes that regardless of which party is elected to government after the election, Britain will lose its credit rating and interest rates will have to rise - perhaps sharply - adding more pressure to debt-laden homeowners already struggling to pay mortgages.