A tightening of belts all round (From The Wiltshire Gazette and Herald)

A tightening of belts all round

THE economy is on a downward slide, with consumer confidence steadily draining away.

That's the finding from Swindon's Nationwide, which has today said its research shows confidence in the economy is at its lowest ebb since May last year, when the building society started regular monitoring.

The main index of confidence has dropped since August and this comes at a time when the economy is growing at its slowest rate for 12 years, and retail sales were flat in August with an annual growth of just 0.8 per cent.

Nationwide group economist Fionnuala Earley said: "In September all four indicators in the Nationwide Consumer Confidence Index fell quite sharply, but the three month trend shows a flatter profile. Overall the index shows a general weakening in consumer confidence since the spring.

"While most people continue to have a positive view of the economy, this is waning as mixed pictures continue to emerge.

"On the one hand there is continued weakness in retail sales, while on the other a boost in the housing market."

During the period of research for the survey, Hurricane Katrina hit America and caused a short-lived rise in petrol pump prices, but this has largely subsided. According to the survey, which is carried out by TNS research, confidence remains highest among the wealthy, but this group of people have also seen the greatest drop in confidence.

Nationwide says that the upper socio-economic groups react most quickly to economic news.

There is a great deal of uncertainty about the future, as an index used to measure how confident people feel about their job prospects and their income has shown a significant drop in September. However, Nationwide, which employs about 4,000 people in Swindon, has predicted that the Bank of England's monetary policy committee, which meets tomorrow to discuss the interest rate, is likely to hold it at 4.5 per cent.

It says there is a four in five chance that it will be held, and that although the next change will be downwards, that is unlikely to happen this year.

On Monday the Advertiser reported that the Thames Valley branch of the CBI has said that this September saw the worst retail sales figures for 22 years.

This view was shared by the Federation of Small Businesses in Swindon which said it feared the slowdown could soon become a recession.