It doesn't look good... I haven't seen it this bad for a long time.

Roger Wright, GFK

But since the terror attacks in the United States, that prop has begun to show clear signs of weakening.

This signals tougher times ahead for the British retail sector, which has so far managed to avoid the gloom surrounding the manufacturing and service sectors.

The Consumer Confidence Barometer, a monthly survey compiled by the GfK Group for the European Commission, shows that consumer confidence fell to -5 in October compared with -1 the previous month and +6 in June.

Job cut fears

The report was compiled in the first three weeks of October, providing a reflection of how consumer attitudes have changed since the 11 September attacks.

But while the attacks and the ensuing "war on terror" are affecting shopping habits, Britons showed most alarm about an economic downturn and the stream of companies laying off workers.

GfK said the most marked deterioration was with confidence in the future of the general economic situation, which has fallen to its lowest point since September 1990, the time of the last major recession.

The survey also reveals that 61% of consumers expect unemployment to rise in the next 12 months.

Severe US outlook

"It doesn't look good - this is really quite negative news. I haven't seen it this bad for a long time," said Roger Wright, managing director of consumer and business research at GfK.

The level of consumer confidence last hit -5 during September 2000 when petrol shortages paralysed much of the country.

But while sentiment is weakening, people report that they do not yet feel that their personal finances have been affected.

But household finances are expected to be squeezed once the string of announced redundancies come into effect.

The report follows news of an even more severe erosion of consumer confidence in the US on Tuesday.