UK consumer confidence suffers further slide

Optimism of both consumers and the companies that serve them slumped in Great Britain last month, according to a pair of reports today.

Consumer confidence fell in February, the ninth drop in the past year, Nationwide building society said.

Households' assessment of their current situation fell to its lowest level since the survey began in May 2004.

Meanwhile the CBI, the UK's largest employers' group, said consumer services companies saw the value and volume of the business fall over the latest three months.

This drop was in stark contrast to a surge in business for professional services firms to its strongest levels since its survey began in November 1998.

It echoes official figures showing that sectors such as business and financial services were behind the acceleration in GDP in the final quarter of last year.

Ian McCafferty, the CBI's chief economic adviser, said: "The increasing divergence we are seeing in the services sector comes as no surprise. Higher household bills are now making their impact well and truly felt on those companies offering leisure and entertainment services. On the other hand, business services are more resilient and benefiting from the buoyant global activity."

Its survey showed the number of consumer-facing firms reporting a fall in business outnumbered those seeing a rise by 17 per cent.

Profitability suffered its largest fall since August 2003, optimism dropped to a three-year low, and companies cut staff numbers for the second quarter in a row.

The survey comes a day after GfK, the market research company, said sales of consumer durables suffered their first fall for at least a decade in February.

Mark Thornton, a partner at Grant Thornton,the accountancy firm that sponsors the CBI survey, said it was no longer just "big ticket" goods that were suffering.

Nationwide said bad news on jobs and retail sales, plus rising fuel and energy prices, had conspired to undermine consumers' confidence.

Its index fell four points to 94 in February, close to a survey low of 92.

Stuart Bernau, its executive director, said the prospect of weakening consumer spending "presented a challenge" to the Bank of England, whose Monetary Policy Committee meets today and tomorrow, and Gordon Brown, who is putting the final touches to his March Budget.

There was fresh gloom from a survey by the retail analysts FootFall, showing the number of visitors to UK shopping centres fell 0.2 per cent in the final week of February to the take the annual decline to 8.0 per cent.

- INDEPENDENT