Consumer confidence tumbled to its weakest in at least 2 1/2 years in August after the Bank of England's surprise interest rate hike, a survey by mortgage lender the Nationwide Building Society showed on Wednesday.
The conflict between Israel and Lebanon's Hizbollah also dampened morale, according to the survey, as did the suspected plot to bomb trans-atlantic airplanes, which caused chaos at British airports.
Nationwide said its consumer confidence index fell 11 points to 83 in August, the weakest since the survey began in May 2004, while Britons' expectations for the economy in the next six month fell 16 points to a survey low of 81.
The Bank of England's decision to increase the base rate clearly had a dramatic impact on consumer confidence and people's reactions over the coming weeks will be crucial, said Nationwide executive director Stuart Bernau.
Speculation that the base rate could increase for a second time before the year is out may mean that confidence remains low for some time to come.
The BoE shocked markets last month by with a quarter point increase in borrowing costs to 4.75 percent to counter growing inflationary pressures, and many economists expect another rise to 5.0 percent before the end of this year.
The Nationwide survey was conducted between July 17 and Aug 19.