Britons are �139bn poorer than they were last year, thanks to the plunge in UK stock prices, a leading research group has said.

While the housing market has continued to soar, the fall in share values has wiped 3.5% off household wealth, the National Institute of Economic and Social Research said.

People are far more sensitive to changes in house prices than equal changes in equity prices

Nigel Pain, NIESR

And public worth has plunged by �415bn, or 10%, since its peak during the third quarter of 2000, when the FTSE 100 share index was sitting comfortably above the 6,000 mark.

Yet, with retail spending remaining robust, there seems little realisation among Britons of their decreasing wealth.

Typically a 10% change in household wealth would bring a 0.5-1.0% change in consumption, economists believe.

Delayed reaction

The institute said the resilience of consumer spending reflected the ability of the housing market to blind Britons to changes in the value of other assets.

"Evidence suggests that people are far more sensitive to changes in house prices than equal changes in equity prices," senior research fellow Nigel Pain told BBC News Online.

"Equity investments are often held on people's behalf by, say, their pension fund manager.

"It is only when they receive their statement that they find out about changes in these assets."

But while house prices have risen by 27% over the past two years, share prices have fallen by 28%, NIESR figures showed.

The FTSE 100 index was on Thursday circling the 4,600 mark.

Hangover to come

And Mr Pain forecast that the slide in share values would eventually feed through into slower spending.

"We do not expect an outright collapse, but we do think the rate of growth will slow," he said.

The institute forecast that consumption would grow by a little over 3% this year, compared with 4% last year, and less than 3% in 2003.