Debt problems and credit crunch `hit consumer confidence`

Rising interest rates and the recent credit crunch which is seeing many Brits tighten the purse strings this Christmas has hit consumer confidence, a leading body has claimed.

Successive financial blows have meant that many consumers are not only cutting back on Christmas spending but other luxuries, such as going out for meals, the British Retail Consortium (BRC) said.

Electrical and DIY retailers are also feeling the effects of the financial clampdown, as a lack of easy credit means many consumers are having to face up to their debt problems. Richard Dodd, head of media and campaigns for the BRC, suggested that retailers and consumers could continue to be hit well into 2008.

He added: "People`s real disposable incomes are falling because inflation is rising faster than people`s salaries are going up. People are feeling less well off and have less money to spend."

Research by GfK NOP released last month stated that consumer confidence in Britain is currently at its lowest level since March 2003.