UK consumer confidence remains at 4-year low

According to the Nationwide Building Society consumer confidence in the UK was hovering at its lowest levels in over four years in February as the recession continued, along with heavy job cuts.

Ahead of the worst result since the data began back in 2004, the index of sentiment increased to 43 from 41 the previous month.

According to the survey, which polled 1,000 people, there were some glimmers of hope as only 41 percent of respondents thought it was a bad time to buy a house, compared to a peak of 68 percent in August.

Meanwhile, there was an 11 percent reduction in those thinking it is a bad time to make major house purchases, which is a further indication that the threat of deflation is falling.

At present spending does appear to be resilient and Fionnuala Earley, Nationwide’s chief economist, has said that this could reflect the impact of falling interest rates on disposable income, as well consumers taking advantage of heavy discounting.

The Bank of England may cut the key interest rate to a record low of 0.5 percent today, and with banks given loan guarantees by the government, finance should be more readily available although the slump is likely to continue for another year at least.

The UK economy contracted 1.5 percent in the fourth quarter, the most since 1980, as consumers cut spending although the nationalised bank, Northern Rock, is being used to expand lending within the economy and kick-start capital investment.

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