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Thursday, 28 September, 2000, 18:12 GMT 19:12 UK
Fuel protests hit shopping sprees
Police and Shell tanker
Police protect a tanker defying anti-fuel tax protesters
by BBC economics reporter Jenny Scott

The fuel-tax protests which brought Britain to a virtual standstill early in September severely dented consumer confidence, researchers have said.

Consumer confidence was already slipping in the early part of the month, research firm GfK Great Britain said on Friday.

But it fell to its lowest level for almost two years after hauliers and farmers demanding cuts in fuel taxes blockaded oil refineries, reportedly bringing many businesses to the brink of bankruptcy.

GfK's confidence barometer, compiled on behalf of the European Commission, fell by six points to -5, the lowest score since December 1998.

Dramatic fall

The confidence barometer stood at -2 the week before the crisis took hold, a breakdown of results of 1,000 interviews shows.

Motorists queuing for petrol
Queuing for petrol as the protests took hold

But interviews conducted at the height of the dispute, between 12 and 14 September, gave an index score of -9.

Media reports at the time of the crisis put the cost of the blockades at up to 250 million a day - roughly 10% of the country's daily output.

Many businesses that rely on just-in-time delivery systems were reported to be laying off staff, while supermarkets in parts of the country were said to be running out of food.

Growing concerns

The reports appear to have stoked Britons' concerns about the impact of the fuel crisis on the economy. GfK's index comparing the general economic situation now with that a year ago stood at -19 in the first week of September, and fell to -31 in the second week.

Future expectations also took a knock. For the economy as a whole, that index stood at -13 in the first week of September and fell to -25 in week two.

Britons were somewhat more optimistic about their personal finances, although again, the petrol crisis appears to have taken its toll.

The future expectations index fell seven points to +4 in September, the lowest score for two years.

Unemployment risk

Flagging consumer confidence can have an important effect on the economy.

If people are concerned about future growth - and therefore their jobs and incomes - they may scale back their spending.

If demand dries up, fears about unemployment could become self-fulfilling.

The GfK survey sheds some light on those spending intentions. Its index tracking the benefits of making major purchases fell by 4 points to +17.

Losses regained

However, the Bank of England's Monetary Policy Committee is likely to take the slip in confidence with a pinch of salt.

Many estimates of the damage to the British economy stemming from the fuel crisis have since been scaled back, with economists predicting that much of the output lost during the blockade will be made up in subsequent months.

The MPC will be aware that the fall out from the crisis could be temporary, and will be wary of exacerbating waning optimism with another rise in borrowing costs.

That doesn't signify that rates have necessarily peaked at their present 6.0%.

It only means that anecdotal evidence and official data covering the crisis period will be considered with the fuel blockades in mind.

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See also:

14 Sep 00 | Business
Fuel crisis: The cost to business
07 Sep 00 | Business
New strike, new losses for UK firms
31 Aug 00 | Business
UK financial optimism grows
07 Aug 00 | Business
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30 Jun 00 | Business
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02 Jun 00 | Business
UK retail prices fall
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