Nationwide Consumer Confidence Index in partnership with TNS

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1 Consumer Confidence falls further CONSUMER CONFIDENCE CONTINUES TO FALL Confidence levels dropped to 51 in July. Overall consumer confidence is 18% lower than this time last month and 46% lower than a year ago. SENTIMENT WEAKENS ABOUT FUTURE ECONOMY After a 9 percentage point increase from the previous month, almost two thirds (61%) of people now believe that the current economic situation is bad and 85% believe that the situation will be the same or worse in six months time. OPTIMISM ABOUT FUTURE EMPLOYMENT FADES The proportion of consumers believing there will be few jobs available in six months time increased sharply in July to 42%, up from 34% in June. MIXED VIEWS ON SPENDING The majority of people (64%) still believe that now is a bad time to purchase major goods such as a house or car. Despite a gradual shift in balance, more people (25%) still believe now is a good time to buy household goods such as fridges and televisions than a bad time (21%). NATIONWIDE MPC FORECAST PROBABILITY OF BASE RATE CHANGE 0.25 up 10% No change % 0.25 down 20% JULY CONSUMER CONFIDENCE Consumer confidence dropped 11 points in July NATIONWIDE CONFIDENCE BAROMETER Down 11 points FIONNUALA EARLEY, NATIONWIDE S CHIEF ECONOMIST, SAID: The continuing downward trend in consumer confidence is not surprising given the recent batch of poor economic data. Talk of the increasing chances of a recession, more weakening in the housing market and the continuing rise of food and energy costs will have further dented confidence as will reports of job losses. Falling oil prices and lower fixed mortgage rates offer some good news, but a cut in the bank base rate is still unlikely this summer. July (94) June (62) July (51) Nationwide Building Society is authorised and regulated by the Financial Services Authority for life assurance, pensions, unit trusts, insurance and regulated mortgages Nationwide Building Society, Nationwide House, Pipers Way, Swindon, SN38 1NW

2 Summer sun fails to warm consumer confidence Consumer confidence continues to fall July June The Index fell by 11 points to in July. Overall consumer confidence is 18% lower than this time Confidence Index last month and 46% lower than a year ago. These are the largest - Present Situation Index recorded falls in the index so far. More gloomy economic data, further falls in house prices, news of job losses and yet more increases in the cost of living on the horizon are likely to have - Expectations Index contributed to the substantial drop in confidence this month. - Spending Index Note: Seasonally adjusted The Present Situation Index, which measures views about the current economic and employment situation, and the Expectations Index, which reflects sentiment about the economy, labour market and household income over the next six months, fell by 18% and 15% respectively. The Spending Index, which reflects views about spending on household goods and major purchases, also dropped by 11% in the month bringing the index level to 54. Fionnuala Earley, Nationwide s chief economist, said: The continuing downward trend in consumer confidence is not surprising given the recent batch of poor economic data. Talk of the increasing chances of a recession, more weakening in the housing market and the continuing rise of food and energy costs will have further dented confidence as will reports of job losses. Falling oil prices and lower fixed mortgage rates offer some good news, but a cut in the bank base rate is still unlikely this summer. Sentiment about the current and future economic situation worsens Consumers feelings about the current economic situation deteriorated in July following a two-month period of relative stability. After a 9 percentage point increase from the previous month, almost two thirds (61%) of people now believe that the current economic situation is bad and 85% believe that the situation will be the same or worse in six months time. Optimism about the future employment situation fades Sentiment about the future employment situation weakened in July, probably brought on by recent news of redundancies in the construction and financial sectors. The proportion of consumers believing there will be few jobs available in six months time increased sharply in July to 42%, up from 34% in June and the largest monthly increase since the start of the year. Mixed views on spending The majority of people (64%) still believe that now is a bad time to purchase major goods such as a house or car but views on purchasing white and brown goods i.e. fridges, televisions etc, are more mixed. Despite a gradual shift in balance, more people (25%) still believe now is a good time to buy these household goods than a bad time (21%). However, the majority of consumers (51%) are still neutral, perhaps soothed by retailers heavy discounting. Consumers expectations about house price growth over the next six months decreased, with the Nationwide House Price Expectations index falling from -3.2% in June to -4.8% in July. Enquiries to: Lynsey Hallam, , lynsey.hallam@nationwide.co.uk

3 Fjs Index The Index dropped 11 points in July from 62 to 51 (research took place from 23 June to 20 July 20). 40 Chart 1 - Index Sub-Indices In addition to the main Consumer Confidence Index, Nationwide Building Society compiles three other indices: Present Situation Index, Expectations Index and Spending Index. Present Situation Index (Chart 2): reflects sentiment about the current economic and employment situation. This Index dropped 10 points in July to % of consumers believe that the current economic situation is bad compared to only 17% at the same time last year. The number of consumers who think there are currently many or some jobs available fell from % in June to 41% in July Chart 2 - Present Situation Index Expectations Index (Chart 3): reflects sentiment about the economy, labour market and household income over the next six months. This index fell 10 points to 55 in July. % of consumers believe that the economy will be worse in six months time compared to 26% at the same time last year. People are less confident about their future employment situation with 42% believing there will be few jobs available in six months time (compared to 34% in June and 26% at this time last year). Chart 3 - Expectations Index Spending Index (Chart 4): reflects sentiment about spending on household goods and major purchases. The spending index fell seven points to 54 in July. 64% of consumers think now is a bad time to make a major purchase compared to 48% in July 20. A quarter of consumers (25%) think now is a good time to buy household goods. 120 Chart 4 - Spending Index The Index (NCCI): The NCCI is based on a similar approach to that used by the U.S. Conference Board which produces the highly regarded U.S. Consumer Confidence Index which has run since 1967 and is widely acknowledged as being a key economic indicator. The Index is compiled in partnership with TNS, the market research group that conducts the research for the US index. *The NCCI Index was first published in May 20. # For July, the TNS research for Nationwide took place from 23 June to 20 July 20 with 1,000 people. The House Price Expectations data is based on a balance of people who believe that house prices will be higher in six months time against those who think they will be lower in six months time. Next monthly Index scheduled for release at: 00.01hrs on 3 September. For past reports and methodology see:

4 Index (seasonally adjusted). May 20 = May July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Confidence Index Present Situation Index Expectations Index Spending Index Consumer responses (non-seasonally adjusted)* Present Situation: consumers' view of the current economic and employment situation UK Economic Situation - Current - Good 45% 41% 36% 45% 35% 34% 33% 31% 25% 25% 17% 14% 14% 11% - Normal 31% 39% 45% 38% 46% 42% 40% 41% 39% 41% 42% 32% 32% 26% - Bad 20% 17% 14% 16% 18% 21% 24% 25% 34% 32% 39% 52% 52% 61% - Don't know 4% 3% 4% 2% 2% 3% 2% 3% 2% 3% 2% 2% 1% 1% UK Employment Situation - Current - Many/Some jobs available 66% 57% 51% % 61% 55% 54% 52% 53% 49% 47% 51% % 41% - Neither many nor few 10% 16% 16% 14% 18% 16% 17% 18% 18% 21% 23% 19% 19% 25% - Not many/few jobs available 20% 23% 25% 19% 16% 23% 21% 24% 23% 24% 25% 24% 25% 28% - Don't know 5% 5% 8% 6% 6% 7% 8% 5% 6% 6% 6% 7% 5% 6% Expectations: consumers' view of the economic and employment situation in 6 months time UK Economic Situation - 6 months time - Better than today 15% 14% 13% 12% 14% 11% 12% 12% 13% 14% 12% 15% 12% 11% - Same % 52% 52% 55% % 47% 41% 39% 36% 40% 37% 33% 32% 25% - Worse than today 30% 26% 28% 28% 31% 36% 42% 44% 46% 43% 45% 46% 53% % - Don't know 5% 8% 7% 6% 6% 6% 5% 5% 5% 4% 5% 5% 3% 3% UK Employment Situation - 6 months time - Many/Some jobs available 57% 46% 41% 46% 44% 42% 44% 36% 39% 38% 32% 35% 37% 28% - Neither many or few 17% 21% 20% 25% 30% 25% 26% 26% 25% 25% 32% 25% 26% 26% - Not many/few jobs available 21% 26% 32% 23% 21% 27% 24% 32% 31% 31% 30% 31% 34% 42% - Don't know 4% 7% 8% 6% 5% 6% 6% 6% 6% 6% 5% 8% 3% 4% Household income - 6 months time - Higher 26% 24% 26% 26% 27% 26% 28% 27% 24% 25% 24% 21% 16% 17% - Same 65% 64% 63% 64% 62% 63% % 61% 63% 61% 62% 62% 69% 65% - Lower 9% 10% 8% 7% 9% 9% 11% 10% 11% 12% 13% 15% 14% 16% - Don't know 1% 2% 2% 3% 2% 2% 1% 1% 1% 3% 1% 2% 1% 2% Spending sentiment: consumers' view of whether this is a good time to purchase major goods, such as a house or car, or household goods Spending confidence - Major purchase e.g. house or car - Good time to buy 28% 18% 15% 17% 14% 10% 16% 13% 11% 14% 15% 14% 18% 17% - Neither good nor bad 27% 30% 35% 33% 34% 28% 24% 27% 31% 27% 23% 19% 19% 18% - Bad time to buy 45% 48% 49% 48% 51% 57% 58% 58% 55% 56% % 65% 61% 64% - Don't know 1% 3% 2% 2% 1% 4% 2% 2% 3% 3% 2% 2% 2% 1% Spending confidence - Household goods e.g. white/brown goods - Good time to buy 58% 41% 39% 41% 40% 35% 35% 44% 36% 33% 27% 29% 28% 25% - Neither good nor bad 33% 46% 49% 49% % 49% 48% 40% 49% 52% 56% % 49% 51% - Bad time to buy 7% 7% 6% 5% 6% 11% 14% 11% 12% 11% 12% 16% 20% 21% - Don't know 1% 6% 5% 5% 3% 5% 3% 4% 3% 3% 5% 4% 3% 3%

5 Notes: Indices are produced using a mix adjusted Methodology which was introduced with effect from June 20. Indices are seasonally adjusted using the US Bureau of the Census X12 method. Currently the calculations are based on a monthly data series starting from May 20. Figures are recalculated each month which may result in revisions to historical data. *All data shown as percentages in this report reflect consumer responses and are, therefore, not subject to seasonal adjustment. Index (non-seasonally adjusted). May 20 = May Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Confidence Index Present Situation Index Expectations Index Spending Index Note to editors: Nationwide s Consumer Confidence Index is based on a monthly survey representative of the UK population. For July, the TNS research for Nationwide took place from 23 June to 20 July 20 with 0 people. NFO, now part of TNS, has worked with The US Conference Board since the inception of its consumer confidence index in 1967.