LONDON (Reuters) - Consumer morale slumped to a record low in January because of worries about job losses and the deepening economic downturn, a survey showed on Wednesday.
The Nationwide building society said its consumer confidence index fell 8 points to 40 last month — the lowest since the survey began in 2004.
“Growing concerns about the economy have been added to by further reports of job losses and this is clearly affecting consumers’ views of the present and future economic and employment situation,” said Fionnuala Earley, Nationwide chief economist.
Britain entered its first recession since the early 1990s in the second half of last year, when a house-price slump, soaring unemployment and tight credit weighed down on households and businesses.
The Bank of England is expected to reduce interest rates to a record low of 1 percent this week with another half percentage point cut on top of the 3.5 percentage points of cuts since October, as policymakers try to reduce the severity of the downturn. But the Nationwide survey showed Britons do not expect things to improve any time soon.
The expectations sub-index fell 10 points to 51 in January, also a survey low, with more than half of those polled saying they expected the economic situation to have deteriorated in 6 months’ time, and two-thirds expected job prospects to worsen.
People’s view of the present was also overwhelmingly gloomy, with 82 percent of the 1,000 respondents describing the current economic situation as “bad.”
However, the spending index, which gauges whether people think it is a good time to make major purchases, held steady at 83 last month.
Half of respondents said now was a good time to buy household goods, although this probably reflected heavy discounting by retailers rather than an actual willingness to purchase goods, Nationwide said.
The survey was conducted between December 15 2008 and January 18 2009.
Reporting by Fiona Shaikh; Editing by Victoria Main