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Fears over spending at highest level since Iraq war in 2003

Higher food and petrol prices have combined with growing fears over the impact of the global credit crunch Credit Crunch

An economic condition whereby investment capital is difficult to obtain. Banks and investors become weary of lending funds to corporations thereby driving up the price of debt products for borrowers.
 to push consumer confidence down at its sharpest ever rate, the Nationwide says today.

The lender's consumer confidence index Consumer Confidence Index

A measure of consumer views regarding the current economic situation and consumer expectations for the future. Information for the index is compiled and released on the last Tuesday of each month by the Conference Board, an
 fell 12 points last month to 86 and comes on top of a big drop recorded by the GfK NOP GfK NOP is a market research company based in London, formed in 2005 from the amalgamation of GfK Martin Hamblin and NOP World after the latter had been purchased by German research group GfK.

NOP is a member of the British Polling Council.
 confidence index last Friday which slipped to the lowest level since the start of the Iraq war Iraq War: see under Persian Gulf Wars.
Iraq War
 or Second Persian Gulf War

Brief conflict in 2003 between Iraq and a combined force of troops largely from the U.S. and Great Britain; and a subsequent U.S.
 in 2003.

The measure of consumers' willingness to spend and separately, their feelings about the economic and employment situation in six months' time both dropped by 14 points to 63 and 83 respectively.

Fionnuala Earley, Nationwide's chief economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the , said: "We've been expecting consumers to react to the events of recent months for some time, so the fall in the index this month was not a surprise.

"It is natural that consumers would think about tightening their belts this Christmas and this is reflected in the weaker spending index. Going into 2008, the expectation of at least two cuts in the base rate should begin to take pressure off finances and restore some confidence."

The Bank of England Bank of England, central bank and note-issuing institution of Great Britain. Popularly known as the Old Lady of Threadneedle Street, its main office stands on the street of that name in London.  holds its latest interest rate meeting this week but most analysts expect it to leave borrowing costs at a six-year high of 5.75% because of worries over rising food and oil prices.

Separately, a report from the Recruitment and Employment Confederation and KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm)
KPMG Kaiser Permanente Medical Group
KPMG Keiner Prüft Mehr Genau (German)
KPMG Kommen Prüfen Meckern Gehen
 yesterday showed a weakening in the jobs market, with permanent job and salary growth slowing, although temporary job placements continued to rise.

Alan Nolan, director at KPMG, said: "What we are seeing is that the credit crunch is tightening its grip over the economy. Whilst the job market remains broadly robust, this latest report suggests an underlying weakening with both demand for permanent staff and vacancies down on the levels earlier this year."

The Bank is concerned that higher energy prices and high levels of employment would push up wage inflation, but there is little evidence of that happening.

An index of take-home pay released today by automated payments group VocaLink suggests that wage growth slowed last month to 3.2% year-on-year from 3.4% in October.
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Date:Dec 5, 2007
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