Consumer morale worsens in December

LONDON (Reuters) - Consumer morale sank lower in December as worries about job losses resulting from the economic downturn soured the Christmas spirit.

The Nationwide Building Society said its consumer confidence index fell four points to 47 last month -- the lowest since the survey began in 2004.

"As the UK enters recession it is likely to be some time before we see confidence returning to levels seen in 2007," said Fionnuala Earley, Nationwide chief economist.

Britain is sliding into its first recession since the early 1990s with house prices slumping at record rates, unemployment rising sharply and more and more businesses and households struggling to cope from the ravages of the credit crunch.

The Bank of England is expected to cut interest rates further this week, following 300 basis points of cuts since October to two percent as policymakers attempt to reduce the severity of the downturn.

"Nearly half of those questioned think that the economic situation will be worse in six months time," Nationwide said.

But many consumers are already very worried. Nationwide's Present Situation Index -- what consumers think about the current economic and jobs environment -- slipped to just 28 in December from 30 in November.

With many high street stores resorting to big price cuts in a last bid attempt to attract shoppers in the run up to Christmas, Nationwide's Spending Index jumped to 82 last month from 66 in November.

"A flurry of pre-Christmas discounting seems to have improved confidence," Nationwide said. "However, recognising that now is a good time to buy may not always indicate a willingness to part with hard cash."

(Reporting by Matt Falloon; Editing by Andy Bruce)