Reported on Wed, 31 May 2006

New figures suggest that retail firms could be set to suffer from a decline in consumer confidence, but taking out a business loan could help companies to get through a difficult period on the high street.

A report by opinion polling organisation GfK NOP reveals that its central consumer confidence index dropped back to minus five in May, from the figure of minus four recorded in April, as British customers registered uncertainty over their purchasing power.

Howard Archer, chief UK economist for market analyst Global Insight, explained that a variety of factors had come together to dent high street spending.

"Higher utility bills, growing speculation that interest rates could rise before the end of the year and the recent retreat in equity prices are likely to be weighing down on the consumer," he commented.

Reporting on consumer behaviour, Mr Archer added: "It is notable that there was an easing back in May in their assessment of their future personal finances and whether or not it is a good time to make major purchases."

Firms struggling to adapt to the state of the economy could consider a low-rate business loan to limit the effects of a market slowdown.

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