Sir Malcolm Field, managing director of WH Smith, said: 'The interest rate cut will help but is not enough. It is not to do with interest rates, it is to do with attitudes and behaviour.
'There has been a reaction to the materialistic 1980s. Consumer confidence needs to be rebuilt . . . it stems in large part from the housing market and cannot be changed overnight. It will take a long time to rebuild confidence and the Government should recognise this.'
John Jackson, UK managing director of Body Shop, said: 'The Government will need to go a lot further before consumer confidence will come back. The rise in unemployment has left people in work fearful for their jobs.'
Consumer confidence has slumped to its lowest level in two years following the devaluation of the pound last month, threatening retailers with a fresh downturn in high-street spending.
More than three times as many people expect the economy to deteriorate in the coming year as expect it to improve, according to the latest survey carried out by Gallup for the European Commission. The survey was conducted during the first fortnight of October.
Confidence dropped sharply in the immediate aftermath of the devaluation and has since fallen again, despite the rapid cut in interest rates to 9 per cent. In recent years, Gallup's findings have provided a useful guide to trends in spending. The EC's composite index of consumer confidence is -28 this month, the lowest figure since November 1990.
By a majority of two to one, people believe that their own financial circumstances will get worse in the coming year; as recently as July, optimists and pessimists were evenly matched.
Savage price cutting by retailers desperate to stimulate demand means that consumers still believe - by a small majority - that now is a good time to make major purchases.
But people are still less enthusiastic about major purchases than in any month since April.
A similar picture is expected to emerge in the Confederation of British Industry's latest monthly survey of retailers, which is due to be published tomorrow.
Official figures for retail sales in September are due on Wednesday. City economists expect sales volume to have fallen by about 0.3 per cent in August to a level 0.7 per cent higher than a year earlier. This represents a fall from the 1 per cent growth rate in the year to August.
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