Stores be forced to offer big discounts to tempt shoppers

The level has fallen to -6 this month from October's -3, according to the latest index from Martin Hamblin GFK.

Analysts had expected the level to stay unchanged, but it appears the first interest rise in nearly four years has badly dented high street confidence.

It is now at its lowest level since the -10 figure recorded during the Iraq war in March, due to increased consumer debt and property price fears.

Perception

Roger Wright, a director at Martin Hamblin GFK, said: "We are seeing consumer confidence falling again from its peak in July after a period of uncertainty.

"The increase in interest rates has probably affected how consumers perceive whether it is the right time to make major purchases."

The fall in the index was driven by a big decline in the number of consumers who thought it was a good time to make big purchases, and a reduction in expectations for how the economy will develop over the next year.

On November 6 the Bank of England raised interest rates by a quarter-point to 3.75%, prompted by the concerns over debt and property prices.