UK consumer confidence falls

Consumer spending has kept the UK economy going

The reaction of the British consumer to the terrorist attacks in the US remains unclear following the release of two new surveys.

The Consumer Confidence Barometer, a monthly survey compiled by the GFK Group for the European Commission, shows that confidence was dented after the terrorist attack in New York but remains in line with its long run average.

But a Mori poll in the Times newspaper this morning paints an altogether bleaker picture, and says economic optimism is at its lowest level since March 1980.

The surveys come a day after the International Monetary Fund (IMF) warned that the terrorist attacks could have accelerated a slowdown in the global economy.

Confidence vital

With the UK's manufacturing sector in the doldrums, the strength of the consumer sector has been responsible for driving the economy forward.

It is feared that any fall in consumer confidence, with a resulting drop-off in spending, could tip the UK economy into recession.

According to research carried out by GFK before and after 11 September, confidence was only slightly reduced by the attacks in the US.

Analysts also noted that the post-attack findings were in line with long-term trends and were slightly up on last September.

"It could have been a lot worse and it wouldn't appear to suggest that the consumer is going to lead the economy into recession" said Ciaran Barr, chief UK economist at Deutsche Bank.

But the findings contradict a Mori poll published in the Times newspaper on Thursday, which showed confidence in the outlook for the British economy has slumped to its lowest levels since 1980.

Only 8% of those polled thought the economy would improve in the next year compared to 64% who thought it would get worse.

US confidence slides

The Mori poll suggests UK consumers have a lot in common with their American counterparts.

A survey by US Conference Board, released on Tuesday, showed the U.S. confidence index recorded the largest monthly drop in over a decade in September.

And on Wednesday the IMF said it has forecast a sharper slowdown in the world economy, following the terrorist attacks in the United States.

It now reckons the economic recovery, predicted for the last three months of this year, has now been pushed back well into 2002.