UK consumer confidence plunges

Consumer confidence in the UK has plunged to its second lowest level on record, with a marked drop among young people, researchers said today.

The GfK NOP index, which charts consumer sentiment, fell four points in the last month to -37, below its levels during the previous recessions of the past three decades.

The only score lower than this was -39, recorded last July amid soaring oil prices and the worst performance since the survey began in 1974.

The index is created through a monthly survey of more than 2,000 people who are interviewed by GfK researchers on behalf of the European Commission.

They found 16 to 29-year-olds surveyed this January showed a drop of 10 points in their consumer confidence since last month.

Younger people, often unencumbered by mortgages and families, have been seen as more sanguine about the economic crisis than older consumers, but dire warnings about recruitment appear to have had an impact.

Rachael Joy of GfK NOP said the drop was perhaps "a reaction to the recent spate of reported job losses, with fears that those wanting to enter the job market will be unable to do so".

The index showed people were increasingly gloomy about the future, with the forecast for their personal finances over the next year dropping four points to a score of -14, a slide of 21 points compared to January 2008.

Sentiment about whether now was a good time to save was also very low at -18, a drop of 48 points from the same month last year.

Commenting on the latest figures, David Kuo of financial website Fool.co.uk warned there was a risk of a total collapse in consumer confidence unless the Government acted swiftly by cutting taxes.

"We are calling on the Government to slash personal taxes instead of encouraging banks to lend more," he said.

"Britain does not need a nation of heavily indebted consumers, but instead a nation of people agile enough to pay off their debts quickly."