British economic slowdown intensifies as big ticket sales fall

The number of British households planning to embark on a major shopping spree slumped to its lowest level for more than a decade last month.

The finding, from the UK's only index of consumer confidence, came as the CBI said retailers suffered their third successive monthly fall in sales - making it the worst quarter since the early recession of the early 90s.

There was a further blow for retailers from a survey showing the Bank Holiday weekend provided a lacklustre kick-start to half-term holiday trading.

John Butler, the UK economist at HSBC, said: "Households no longer intend to make a major purchase. The big-ticket durable boom is over along with the boom in mortgage equity withdrawal."

The reports were the latest to point to a sudden and dramatic turnaround in consumer willingness to spend and borrow, and will fuel calls for the Bank of England to prepare the ground for a cut in interest rates.

According to the survey of consumer confidence by GFK Martin Hamblin, only 5 per cent of households on balance believe now is a good time to make a major purchase - the lowest figure since 1994. The number of households planning to increase savings rose in May.

The fall dragged down the overall index of confidence to minus 1 per cent, although it was still higher than levels seen for much of 2004.

Reza Chady, a director of GfK Martin Hamblin, said: "Additional pressure on disposable income from higher interest rates seems to be impacting on customer spending and encouraging caution, as seen in the increased propensity to save."

The CBI survey, which covered 226 companies representing four out of 10 shops across the UK, said the number reporting a fall in sales compared with a year ago outweighed those seeing a rise by 7 per cent.

This was an improvement from the balance of minus 14 per cent in April but left the rolling three-monthly average at its lowest level since August 1992.

FootFall said the number of visitors to Britain's major shopping centres over the three-day weekend was 1.3 per cent lower than a year ago.

- INDEPENDENT