UK consumers stalked by job fears

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UK consumers are getting increasingly worried about their job prospects, a survey suggests.

Nearly a quarter said they had less job security than a year ago, while fewer than one in five said they had more.

Overall, about a third of 2,000 people surveyed by Lloyds TSB said job prospects across the UK economy had got worse in the past year.

Eight out of 10 consumers said they thought interest rates would keep on rising, fuelling concern over jobs.

Less secure

Higher interest rates may be having a detrimental effect on how secure people feel in their jobs.

Just 18% of consumers surveyed said they felt more secure in their employment than they did a year ago.

This is an equal all-time low for the survey, which has been conducted every month since November 2004.

As for job prospects across the wider UK economy, more consumers are pessimistic than optimistic.

About a third of consumers said they thought job prospects across the UK economy had worsened in the past year, just one in seven said things had got better.

'Fait accompli'

The spectre of unemployment is now beginning to weigh more heavily Trevor Williams, Lloyds TSB, chief economist

Since last August, UK interest rates have been raised four times in a bid to keep a lid on inflation.

The Bank of England's Monetary Policy Committee voted 5-4 to keep rates on hold in June.

Most analysts expect the Committee to raise rates over the next few months.

The message is that rates are on the rise seems to be getting through to consumers, Lloyds TSB said.

"Consumers have been holding their breath waiting for another interest rate rise and the majority obviously see it as a fait accompli," Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said.

"The combination of interest rate hikes and consumers' correct expectation that prices are on the rise means the spectre of unemployment is now beginning to weigh more heavily," he added.

In response to these pressures, consumers are likely to rein back their spending, which in turn would weaken economic growth, Mr Williams concluded.