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BERLIN (Reuters) - Europe should stand ready to ease monetary policy if crumbling consumer confidence leads to a big drop in spending, the head of Europe's biggest home improvements retailer said on Tuesday.
So far, spending levels have remained fairly steady, albeit subdued, in the face of a euro zone sovereign debt crisis, Kingfisher (KGF.L) chief executive Ian Cheshire told Reuters.
But if the region starts to slide back into recession, Cheshire said it would be better to try to stimulate demand via monetary policy rather than for governments to relax their focus on cutting their deficits.
"Given the limited room for manoeuvre in terms of fiscal options, QE (quantitative easing) makes an awful lot of sense provided it doesn't go on for ever," Cheshire said in an interview at the World Retail Congress in Berlin.
A survey of 100 retails with annual turnover of more than $1 billion (640 million pounds), published on the first day of the Congress, showed western European store groups more pessimistic about domestic consumer confidence than those in any other part of the world except Australia.
With the euro zone debt crisis and turbulent stock markets frightening consumers already grappling with higher bills and lower wages, retailers are overcoming their traditional wariness of stepping into the political arena.
Cheshire added that with hindsight, the European Central Bank's decision to raise interest rates earlier this year seemed "odd."
He disagreed with a call by Britain's main opposition Labour Party for a cut in VAT sales tax to boost spending and suggested governments could improve confidence by moving more quickly to end uncertainty over public sector job cuts.
"Instead of leaving everyone in limbo, (governments need to ask) is there a way to get more quickly to certainty?"
Kingfisher, which runs market leader B&Q and the Castorama and Brico Depot stores in France and elsewhere, is well placed to cope with tough trading conditions thanks to its broad geographic exposure and drive to improve profit margins by buying more goods centrally and directly from cheap manufacturing centres like Asia, Cheshire said.
Earlier this month, the British-based group beat forecasts with a 24 percent rise in first-half profit.
Cheshire said custom from the building trade was a little stronger than the home improvements market, and had high hopes for B&Q's new website for mobile phones, which it launched on Tuesday.
"We think it's a great opportunity. We're a much more appropriate mobile (shopping) category than a number of others," he said, pointing out the convenience for tradesmen in particular of being able to order goods on the move.
Editing by Sophie Walker