Consumer confidence takes a further hit in March with job fears and economy worries.

According to Nationwide, consumer confidence in the UK fell by two points in March to 41 as job market fears continued to cause concern.

Worries caused by job losses undermine consumer confidence, causing it to drop from 43 in February to 41 in March.

Unemployment in the UK recently hit two million; the highest figure since 1997. As the recession deepens, the number of unemployed is expected to continue rising.

But despite the recent drop, confidence has remained relatively stable this year according to the Nationwide Consumer Confidence Index, published today (8 April).

Pessimism was rife in March with 66% of the UK population worried that there are now few jobs available, compared to 64% in February.

Fionnuala Earley, Nationwide’s Chief Economist, said: “Overall consumer confidence has remained broadly stable since the start of the year, but feelings about the current labour market have weakened. Further reports of job losses are likely to have affected consumers’ views of this.

“However, increased optimism towards the current and future economy is encouraging. Even though retail sales are now weaker, spending sentiment has remained stable. This stability isn’t surprising given further reductions on the high street and lower mortgage costs for some.”

Consumers are also pessimistic about future income with a larger percentage of people believing their income will be lower rather than higher in the next six months. Many companies have announced pay freezes as part of cost-cutting measures.

The British appear to feel slightly more positive about the economy in March as opposed to in February, with the percentage of people worried about the current climate dropping from 86% to 83%.

Nationwide’s Consumer Confidence Index is based on a monthly survey representative of the UK population, with 1000 participants.