An icy start to the year for consumer confidence

The fall, ticking down to 40 from 48 in December, brings the Index to half the level of this time last year and is a clear reflection of consumers' growing concerns about the economic downturn.

The economic and labour market situation, both now and in the future are the major reasons for the continued fall in confidence, according to Nationwide. The Present Situation and Expectations indices also fell to 23 and 51 respectively. However, following the steep increase in December, the Spending Index remained static at 83 during the month, perhaps still supported by price reductions on the high street and the latest cut in the Bank Rate.

Fionnuala Earley, Nationwide's chief economist, said: "It is no surprise that consumer confidence weakened again in January, given official figures now show the UK fell into recession at the end of 2008. Growing concerns about the economy have been added to by further reports of job losses and this is clearly affecting consumers' views of the present and future economic and employment situation. Over the coming months we expect consumers to remain cautious as they take stock of how these economic conditions will impact on them and we would not expect to see a significant improvement in confidence until there is greater certainty about economic recovery."