(RTTNews) - Consumer sentiment in Great Britain moved to the lowest point on record in December as an economic slowdown paved way to higher unemployment.

The Nationwide Building Society reported Tuesday that its consumer confidence index for the U.K. declined 4.0 points from November to a reading of 47 in December, the lowest in the four-year history of the survey. A year ago, the reading was at 84.

Nationwide’s Spending Index increased sharply to 82 in December from 66 in November, a move attributed to heavy price cuts from merchants looking to stimulate holiday shopping.

The survey found that 49% of consumers expect the economic situation to worsen over the next six months. That was up from 45% recorded in November. Of the surveyed, 63% believe there is a shortfall in job availability.

Chief economist at Nationwide, Fionnuala Earley said, “Consumers’ confidence fell sharply in 2008, driven mainly by their sentiment about the economic and labor market situation. As the U.K. enters recession it is likely to be some time before we see confidence returning.”

The British economy contracted 0.6% in the third quarter, the largest decrease since the fourth quarter of 1990. Household spending dropped in the third quarter.

The Bank of England is widely expected to cut the benchmark interest rate further in January. Economists are expecting the central bank to lower the key interest rate by 50 basis points to 1.5% in its monetary policy meeting on January 8. In December, the central bank had slashed its interest rate by 100 basis points to 2%, the level last seen in October 1939.

The British Chambers of Commerce had called for a 100 basis points cut at the central bank’s January meeting to 1%. Chief Economist at the BCC, David Kern said, “The rapid worsening in the economic situation and growing fears over rising unemployment reinforce the need for the MPC to continue with aggressive interest rate cuts.”

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