Consumer morale lowest in 12 years

LONDON (Reuters) - Consumer morale slipped this month to its lowest in any time since the Labour government came to power in 1997 as Britons became increasingly anxious about the economic outlook, according to a survey on Friday.

Research firm GfK NOP's consumer confidence barometer slid to -14 in December from -10 in November, the lowest reading since December 1995 at the end of the last Conservative administration. And consumers were least inclined to buy big-ticket items since the recession of 1991.

The slide in morale piles further pressure on Prime Minister Gordon Brown, whose poll ratings are already in the doldrums, and suggests the Bank of England's quarter-point cut in interest rates has done little to soothe worries about the credit crunch.

Brown, who as finance minister prided himself on steering Britain to economic prosperity, tried to reassure voters this week the economy would be able to withstand any shocks and that interest rates had room to come down further.

But most analysts expect a sharp slowdown next year, and consumers are likely to lead the downturn as the rising cost of living and falling house prices dampen the urge to spend.

The GfK index gauging the climate for major purchases slipped to -14 in December from -7 in November.

That spells bad news for retailers who are already worried that a lacklustre start to the key Christmas shopping season will last well into next year.

"As 2007 draws to a close we see that consumers are suffering from a dose of realism," said Rachael Joy at GfK/NOP.

The index measuring sentiment about the overall economy over the next year fell to -26 from -21 in November, the lowest since March 2003, and that gauging peoples' optimism about their own finances deteriorated slightly to +8 from +9.

The survey was conducted between November 30 and December 9.