Confidence falls to record levels

Consumer confidence fell by record levels last month, a survey showed on Wednesday.

The Nationwide consumer confidence index fell by 11 points to 51 in July, with overall confidence down 18 per cent compared to last month and 46 per cent lower than a year ago.

The drops in consumer confidence are the largest falls in the index’s history so far.

And Nationwide says worse is still to come, with further falls in house prices, news of job losses and more increases in the cost of living expected in the coming months.

The present situation index, which measures consumers’ views regarding the current economic and employment situation, also fell by 18 per cent in July.

While the expectations index, which reflects sentiment about the economy, labour market and household income over the next six months fell by 15 per cent.

And the spending index, reflecting consumers’ thoughts about spending their money on household goods and major purchases, dropped by 11 per cent 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.”

The Nationwide consumer confidence found that 61 per cent of people believe the current economic situation is bad and 85 per cent believe the situation will be the same of worse in six months’ time.