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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/01/huge-slump-in-consumer-confidence.jpg"><img class="alignnone size-full" title="Consumer confidence has suffered a dramatic slump, a survey revealed" src="http://londonglossy.com/wp-content/uploads/2011/01/min-huge-slump-in-consumer-confidence.jpg" alt="Consumer confidence has suffered a dramatic slump, a survey revealed"/></a></p>
<p>Consumer confidence took its biggest knock for nearly 20 years after the VAT hike earlier this month, leading to warnings that the UK economy could be facing &#8220;a very painful period&#8221;, a survey has found.</p>
<p>There was an &#8220;astonishing&#8221; eight-point fall in a key measure of consumer confidence to minus 29 between December and January, the biggest monthly drop since the 1992 recession, according to the survey by GfK NOP Social Research.</p>
<p>All the confidence measures recorded by the survey dropped over the past month but the biggest fall was in the score representing consumers&#8217; willingness to make major purchases, which slumped 22 points to minus 29.</p>
<p>The index representing people&#8217;s expectations for their financial situation over the next year slumped to minus 12, which is 16 down on a year ago, while the score for people&#8217;s expectations for the economy over the next year was at minus 30, compared to minus two a year ago.</p>
<p>The firm&#8217;s managing director Nick Moon said that with more Government austerity measures to come and prices still set to rise, talk of a double-dip recession was &#8220;unavoidable&#8221; following the surprise contraction in the UK economy in the final three months of 2010.</p>
<p>Mr Moon said: &#8220;The VAT increase is the first of the Government&#8217;s austerity measures that has had a widespread impact on consumers, and it seems to have hit people&#8217;s economic confidence hard, especially as the biggest drop was in consumers&#8217; appetite for major purchases. With inflation on the up and the full force of the cuts yet to hit, these figures could be the beginning of a very painful period.</p>
<p>&#8220;There is a chance that these figures represent a post-Christmas blip but even if there is a rally in February it is extremely unlikely that it will reverse this massive drop.&#8221;</p>
<p>It is only the sixth time in the 35-year history of the survey that there has been such a collapse in confidence, he added.</p>
<p>The figures are the latest in a series of bleak statistics for the UK economy. Earlier this week, the Office for National Statistics revealed that GDP took a shock 0.5% drop in the final three months of 2010 as the Arctic weather caused widespread disruption in December.</p>
<p>And business body CBI revealed retailers&#8217; sales growth slowed in January. The news dampened hopes that the sector would bounce back after the ONS said sales declined 0.8% in the previous month, making it the worst December on record.</p>
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