This will support the 'doves' on the Bank of England's Monetary Policy who are against raising interest rates.

April's net new consumer credit was £866m ($1.4bn), down from £1.4bn in March and well below the forecast of £1.0bn.

The March figure itself was revised downwards from a previous estimate of £1.429bn.

Net lending on credit cards fell to £380m from £407m in April, and other lending (partly credit from retailers) fell sharply from £996m to £486m.

The weakness of consumer sentiment was reflected last month in profits warnings from household goods retailers like Allied Carpets.

Net lending by banks and building societies was up slightly, with net lending on homes rising from £1.8bn to £2.3bn.

House price inflation is slowing too

But house price pressures remain weak, with the Halifax house price index rising just 0.3% in March, compared to 0.8% in April, for an annual rise of 5%. House prices over the last three months have risen by 2.4%.

The Halifax said: "There is no evidence of market overheating so we do not see any need to put the brakes on by raising interest rates."

The Bank of England's Monetary Policy Committee meets Thursday to consider the level of interest rates. The latest figures seem to confirm market sentiment that an interest rate rise is increasingly unlikely. At previous meetings the Committee was split down the middle over the need for an increase, but recently two of the more hawkish members have said they are reconsidering their position.

Chancellor to remain tough

Meanwhile the Chancellor of the Exchequer, Gordon Brown, was making it clear that the government was sticking to its tough spending plans for the remainder of the Parliament.

Speaking to the Venture Capital Association in London, he said that he was sticking to plans to finance current government spending out of tax revenue without resorting to borrowing for the next three years.

He re-affirmed that borrowing would only be allowed to fund capital spending and he said the government would also be setting a figure for the debt/GDP ratio for the rest of its term in office - which would also constrain any attempt to increase borrowing further.

The Chancellor's determination to "lock in the prudence that we have achieved since we came to power" could help swing the balance in the Monetary Policy Committee.