2.2.2 Consumption NOT FINISHED

CONSUMER CONFIDENCE

Consumer confidence is a measure of how optimistic or pessimistic consumers are about the state of the economy and their own financial situation, which influences how much they are willing to spend or save

KEY FACTORS INFLUENCING CONSUMER SPENDING

income levels, consumer confidence, interest rates, inflation, employment and job security, taxation, wealth (such as house prices and savings), availability of credit, and expectations about the future economy

CONSUMER CONFIDENCE (SENTIMENT) – KEY FACTOR

Economic Growth, Household debt, Unemployement, House Prices, Inflation rates increasing or decreasing

BASE RATE OF INTEREST

Set by the Bank of England, it is the rate of interest used by commercial banks as the basis for their own lending rates. Base rate of interest is 4%

DISPOSABLE INCOME

Income after the deduction of direct taxes and addition of welfare benefits.

FTSE-100 Index

The FTSE-100 tracks share prices of the 100 largest companies listed on the London Stock Exchange

SAVINGS RATIO

The ratio of personal saving to household disposable income (usually expressed as a percentage)

MARGINAL PROPENSITY TO CONSUME

The marginal propensity to consume is the change in consumer spending arising from a change in disposable income