Nationwide: UK consumer confidence hits record low

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Nationwide: UK consumer confidence hits record low

Wed 6th Feb 2008

The Nationwide Consumer Confidence Index fell to its lowest level in January since the survey began in 1967, from 85 points to 81.

Both the Expectations Index and Current Situation Index fell, reflecting consumers' negative perceptions about their current and future economic and employment prospects.

Despite this the Spending Index, which measures consumers' willingness to spend, remained stable in January, although at 68 it is still considerably lower than at the same time last year.

Nationwide found that most people believe their household income will be the same or higher in six months' time, but only 36 per cent were positive about the future of the labour market.

Martin Gahbauer, Nationwide's senior economist, said the continued downward trend in consumer confidence was "not unexpected" and cited "sharp falls in share prices, the rising cost of essential items and a weak exchange rate" as the most likely reasons for the downturn.

He added that the expected interest rate cut from the Bank of England this month should boost consumer confidence in the short term.

Consumers' have been hit recently by the credit crunch, which has caused lenders to tighten their criteria leading to one in eight credit card holders having their credit limit cut.

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