Tough Christmas ahead

The prospect of a tough Christmas ahead for retailers was evident yesterday after it was revealed that confidence among Britain 's consumers has fallen to its lowest levels since the launch of the war in Iraq two and a half years ago. With individuals worried about the state of their finances and the health of the overall economy, the consultancy GfK NOP detected a mood of increasing pessimism in its monthly barometer of sentiment. "We continue to see the nation in subdued mood compared with the earlier part of 2005. Confidence continues on a downward trend," said Grant Montague, a divisional director at GfK, after data showed a reading of -8 in October, down from -5 in September.

Separate figures from the Bank of England showed that demand for credit is being affected by consumer caution, with growth running at its slowest rate in more than a decade. The City said the pr ospect of weak consumer demand over Christmas and new year would keep alive the pr ospect of future cuts in interest rates over the coming months. Analysts will now be closely scrutinising today's distributive trades survey from the CBI for further clues as to the likely spending patterns of consumers in a three-month period which accounts for about 40% of annual retail spending.