Surveys of consumer confidence have shown widespread pessimism over the economic outlook but some limited optimism on house prices, according to the Nationwide Building Society.

The Nationwide spending index fell by 14 points to the lowest level since November 2008, while the expectations index fell by 12 points in September, reversing an improvement in sentiment during August.

Chief economist at Nationwide, Martin Gahbauer, said: “August figures had suggested that confidence may have turned the corner following a succession of falls in the run up to and after the recent general election. However, these gains have now been reversed following a notable drop in confidence across the main indices in September.”

Gahbauer said the pessimism about the economy and consumers spending ability may have been driven by the realisation of cuts announced in the emergency Budget earlier this year, while the imminent Comprehensive Spending Review was likely to have an impact on outlook over the coming weeks.

“The debate about public sector spending cuts has been heavily featured in the news over this period and we have seen expectations reigned in for both the future economic and employment situation which has helped force this index down,” he added.

However, the consumer confidence data, published on 13 October, did show a ‘guarded optimism’ towards the housing market, with consumers expecting the value of their home to increase by 0.1 per cent over the next six months, compared to a fall of 0.1 per cent predicted in August.

For the consumer confidence index, market research firm TNS carryout a monthly survey of 1,000 adults, for Nationwide, to gauge current thoughts and expectations about the economy, employment and income. The group polled is selected to be representative of the UK national population.

Surveyors say prices going up

A housing market survey published this week by the Royal Institution of Chartered Surveyors (RICS) said 36 per cent of surveyors were reporting a fall in house prices. Half of respondents said prices were stable.

RICS spokesman, Ian Perry, said a fresh influx of properties to the market, combined with a lack of buyers remained the key problem affecting the sector.

“First time buyers are in particularly short supply as the high deposits required by lenders prevent them from taking their first steps on the property ladder. Without sufficient demand property prices continue to slip back,” he said.

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