Its latest consumer confidence index revealed that buying habits and confidence about future personal financial situations remain fragile, as customers cut back sharply on their spending on major household or other purchases.

Fewer consumers believe that now is a good time to hand over large sums for significant purchases, and readiness to spend fell by 11 points to 83 points.

Nevertheless, overall consumer confidence rose, as consumers expressed a positive outlook on their present economic and financial situation and looked more optimistic about their future economic fortunes then they have since October 2006.

But improved confidence about spending will have to wait for clarity on interest rate outcomes, the building society’s chief economist Fionnuala Earley remarked.

Nationwide estimates the probability of a rate rise at the next MPC meeting at 40 per cent, against a six in ten chance of remaining at 5.25 per cent.

“With uncertainty about the interest rate position, but with the risk clearly on the upside, consumers are unlikely to recover confidence in the short term,” Ms Earley predicted.

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