The GfK/NOP Consumer Confidence Index, which is compiled on behalf of the European Commission, rose unexpectedly in November, but remained very low. The headline measure increased to -31 (consensus/BarCap: -33) from -32 previously.

The small improvement was a result of an improvement in backward-looking measures, as well as in the climate for major purchases; the sub-index for the latter increased by five points to -27. On the other hand, the sub-index for the general economic situation over the next 12 months fell by 2 points to -33, reflecting the fact that the outlook for the UK economy has deteriorated sharply recently.
 
The GfK index has been at or below the -30 level for five out of 11 months this year; the only two other occasions this index has been at these low levels for a prolonged period of time (1990s and 2008) are associated with a shrinking economy. Against the backdrop of the worsening economic conditions and lacking any improvements in the forward-looking measures, we do not see this month's increase in the GfK index as a reversal of the recent subdued trend. We expect the mood among British consumers to remain sombre over the coming months with little relief coming from the labour market or earnings growth.
 
We expect the combination of weak confidence and the squeeze on real earnings to lead to negative household consumption in Q4 11, after consumer spending has been flat or falling for five consecutive quarters. We expect the recovery in consumer spending thereafter to be modest and not provide a significant boost to GDP growth.

source: BarCap