Nationwide’s Consumer Confidence Index has found that more than half of Brits believe that the financial situation will deteriorate further during the next six months, which is the highest proportion this year, and an increase of 24 per cent on 2007.

The Index measures people’s views about the current economic climate and employment, and also about views on spending.

Consumers are also pessimistic about their own finances, with just 16 per cent thinking that their households will be financially better off in six months – five per cent lower than in May and more than 10 per cent lower than this time last year.

In light of expectations, more people think that now is the best time to spend money on major purposes, before the situation gets any worse, with 18 per cent more buying a house or car in June, the highest level since July 2007.

Nationwide deduced that the fall in consumer confidence is due to the weakening housing market, rising mortgage rates, and higher household bills as food and fuel become increasingly expensive.

Fionnuala Earley, Nationwide’s chief economist, said: “This month’s drop in confidence is to be expected given the recent run of bad news. With reports of rising inflation rates, weaker economic growth and further falls in house prices, it is not surprising that people are feeling much less optimistic about the future.

“While consumers appear to be fairly relaxed about the availability of jobs, with unemployment beginning to rise, we are likely to see a change in labour market sentiment over the coming months.”

The Present Situation Index and Spending Index – two parts of the Consumer Confidence Index – remained static in June, at 56 per cent and 60 per cent respectively, but they are both at the lowest they have been to date.

© Fair Investment Company Ltd