A massive fall in consumer confidence has led many to predict a fall in interest rates will occur in the next six months. Nationwide and Lloyds TSB today released reports showing heavy falls in consumer confidence.”There’s been a noticeable change of sentiment on the economy this month and people now seem to feel much more uncertain about the future,” said Nationwide’s executive director Stuart Bernau.”With property prices cooling, consumers seem to be feeling less optimistic, tightening their belts and looking to reduce their debts rather than spend on the high street.

People seem particularly uncertain about the future of the economy, jobs and income and it could be that the next couple of months are critical to the future direction of the economy,” he explained. And this drop in confidence - along with other economic data - is leading people to predict interest rates could soon be dropping from their three-and-a-half year high of 4.75 per cent leading to cheaper mortgage loans for home owners.

Trevor Williams, chief economist at Lloyds TSB Financial Markets, commented: “As a result of continued uncertainty about economic conditions, as suggested by this [consumer confidence] survey, it is not surprising that financial markets are currently pricing-in a cut in interest rates before the end of the year. ”The outlook for consumer spending growth remains one of the key uncertainties facing the Bank of England as it aims to meet its two per cent inflation target.”