Fears that the UK economy is slowing down have been fuelled by a new survey which shows consumer confidence has hit its lowest level since December 1995.

The GfK NOP barometer of UK confidence scored a rating of minus 14 in December, compared with minus 10 in November, signalling that this month's interest rate cut came too late to curb economic pessimism.

The group polled 2,000 consumers between November 30 and December 9, questioning them about their personal finance situation over the last and next 12 months, the general economic situation for the same periods, and how they feel about making major purchases.

It found that all of these key measures were down on the month before, with the mood for consumers making major purchases sliding to its lowest level for 16 years.

GfK spokeswoman Rachael Joy said: "As 2007 draws to a close, we see that consumers are suffering from a dose of realism.

"Traditionally at this time of year you would see a drop whilst consumers wait for the January sales, but this, combined with reports of a credit crunch, has resulted in this measure dropping to its lowest level since June 1991."

The report said that inflation and price increases contributed to the decline in confidence on the general economic situation of last year and the next 12 months.

GfK said: "Even the interest rate decrease announced on December 6 has done little to alleviate these concerns. As we go into 2008 it will be interesting to see if anything can improve the mood of the consumer."

The GfK survey comes after the CBI published a study which said retail sales grew at their weakest level for more than a year.

And more evidence emerged of the impact of the credit crunch on homeowners after the mortgage industry revealed its first year-on-year fall in mortgage lending for more than two years.

The Council of Mortgage Lenders said that lending in November was £30.7bn, down 8% from the £33.2bn recorded during the same period last year.

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