Property, Mortgage & Insurance News from the Best Deal 4 U

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UK consumer confidence 'slumps'

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Wednesday, December 5, 2007 10:39:05

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UK consumer confidence has seen its biggest decline in three years during November because of higher interest rates and prices, a report says.

Mortgage lender Nationwide said its gauge of consumer confidence fell by 12 points to 86 last month, the biggest drop since the survey started in 2004.

The figures will underline concerns about the state of the UK economy and amplify calls for an interest rate cut.

Consumer spending is one of the main drivers of the UK's economic growth.

In the past week, a number of companies have said that they are seeing a slowdown in demand on the High Street.

At the same time, financial industry experts have warned about the continuing impact of problems in the US housing market, which have triggered a global credit crunch and problems at UK lender Northern Rock.

"Uncertainty about the effects of the credit crunch together with rising oil and food prices seem to be affecting feelings about jobs and the future economic situation," said Fionnuala Earley, Nationwide's chief economist.

The Bank of England is due to give its latest interest rate decision on Thursday, and some analysts are predicting that it will cut borrowing costs by a quarter of a percentage point to help shore up the economy.

The Daily Telegraph said that former members of the Bank's rate setting Monetary Policy Committee Willem Buiter and Sushil Wadhwani were among those calling for borrowing costs to fall from their current level of 5.75%.