The firm’s Consumer Confidence Index indicated that while consumer confidence is still low, it has not fallen significantly further.

The current index position is 48, down only one point from July but far below the position of 64 for August last year.

Some 68 per cent of people rated the economic situation as bad and 63 per cent rated the employment situation as bad.

Both these figures are better than the figures in July.

However the outlook for the next six months was worse, 36 per cent of people said the economic situation would get worse. This was up from 31 per cent in July.

Robert Gardner, Nationwide’s chief economist, said: “There was a raft of bad news in August, so in some respects, it is encouraging that we observed only a marginal decline in sentiment during the month.”

He said the relative stability was more likely to be a reflection of the already subdued level of confidence rather than indicating resilience in the household sector.

Regarding the future he said it was unlikely confidence would return until exports picked up.

One positive was the increase in the spending index which rose by seven points, indicating improved sentiment was encouraging people to make major purchases.