LONDON (Reuters) - Worries about an impending recession pushed consumer confidence to its lowest in at least four years in November, even though consumers were more inclined to spend, a survey showed on Wednesday.
The Nationwide Building Society’s consumer confidence index fell six points last month to 50, the lowest reading since the survey started in May 2004.
The fall was driven by sharp declines in both the present situation index and the expectations index as Britons fretted about the state of the economy and the security of their jobs.
“Consumer confidence dropped again this month against the backdrop of an emerging recession in the UK and continued global uncertainty,” said Fionnuala Earley, Nationwide’s chief economist.
“Reports of job cuts have almost certainly impacted on sentiment about the present and future employment situation.”
There were some signs, however, that the Bank of England’s recent interest rate cuts and the lure of a bargain were encouraging potential shoppers.
The sub-index measuring spending confidence rose from 56 in October to 64 in November, its highest level since June.
Interest rates were cut to 3 percent last month — their lowest level since the early 1950s — and are expected to be cut this week to just 2 percent. At the same time, High Street retailers have been slashing prices to attract cost-conscious buyers.
Department stores group Debenhams DEB.L is launching a second three-day “price cutting bonanza” this week and newspaper reports suggest Marks & Spencer (MKS.L), Britain’s biggest clothing retailer, is considering another 20-percent off sale on Friday.
The government announced a temporary cut value-added sales tax last month in an attempt to encourage consumers to spend their way out of recession. Critics, however, say the cut will have a muted impact when credit is tight and unemployment rising fast.
“There is a difference between recognising that it’s a better time to buy and the ability or desire to spend,” the survey noted.
Reporting by Christina Fincher; Editing by Ron Askew