A closely-watched measure of consumer mood suggests the Brexit decision will knock spending in the economy heavily.

Shoppers will be watching their bank balances closely in the coming year.

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By Ed Conway, Economics Editor

Levels of consumer confidence in Britain have fallen at the fastest rate in more than two decades - the first statistical evidence from a major body that the EU referendum vote has had an impact on the economy.

The confidence barometer from research group GfK dropped from -1 points to -9 between June and the week following the poll.

It is the biggest single fall since 1994, and will be interpreted as a solid sign that concerns over Britain's departure from the European Union are now starting to weigh on the economy.

So far there have only been scant pieces of evidence on the Brexit impact, and it will be some months before official statistics show whether the vote has changed behaviour, and whether there is a recession.

But moves in consumer confidence tend to be closely correlated with GDP, as shoppers spend less and national income suffers, so economists may conclude that a slowdown now looks likely. 

Sterling/Dollar Parity 'Possible'

GfK, whose survey has been running since 1974, said that when it split its core index by how people said they voted in the referendum, remainers were at -13, compared with -5 for leavers.

The survey, which was run from 30 June to 5 July also found that appetite for making big purchases fell, while the proclivity to save rose. 

Joe Staton, Head of Market Dynamics at GfK, said: "In these extraordinary times this one-off CCB Brexit Special gauges the temperature of consumer confidence right now.

"During this period of uncertainty, we've seen a very significant drop in confidence, as is clear from the fact that every one of our key measures has fallen, with the biggest decrease occurring in the outlook for the general economic situation in the next 12 months."

Some 60% of those surveyed said they expected the general economic situation to worsen in the next 12 months, up from 46% in June.

The GfK survey follows research from the National Institute of Economic and Social Research (NIESR) yesterday which found that the UK economy expanded by a relatively strong 0.6% in the second quarter of the year.

However, NIESR said that that number was mainly strong because of rapid growth in April, which then tailed off in May and June, around the time of the referendum. 

ECB Threatens Legal Action Against Slovenia After Police Raid

LJUBLJANA/FRANKFURT—

The European Central Bank threatened to take legal action against Slovenia on Wednesday after police seized documents from the country's central bank in a rare conflict between authorities and one of the eurozone's most respected institutions.

ECB President Mario Draghi said he deplored the seizure, which infringes on the ECB's legal privileges and immunities, and called on European Commission President Jean-Claude Juncker to intervene.

Slovenian police conducted an investigation Wednesday in four locations in Ljubljana, including at the central bank, collecting evidence in a pre-criminal investigation related to possible irregularities during a bank overhaul in 2013.

"Seized equipment contains ECB information and such information is protected under directly applicable primary EU law," Draghi said in a letter to the Slovenian State Prosecutor General. "The ECB will also explore possible appropriate legal remedies under Slovenian law."

The ECB said police seized information on the computers of Bank of Slovenia Governor Bostjan Jazbec, who sits on the ECB's rate-setting Governing Council, as well as a former deputy governor and some staff members.

Slovenian police said the investigation related to an assessment of one of the banks rescued by the state in 2013, which meant the bank could scrap its obligations toward holders of subordinated bonds and subordinated debt in the value of 257 million euros.

In 2013, the previous government had to pour more than 3 billion euros ($3.33 billion) into local banks to prevent them from collapsing under a large amount of bad loans. The move helped the country narrowly avoid an international bailout.

As part of the bank overhaul, about 600 million euros of subordinated bonds were scrapped in five banks.

In 2014, the Slovenian Association of Small Shareholders filed several court cases against the Bank of Slovenia and local banks, claiming the subordinated bonds and shareholders' capital in rescued banks should not have been erased. None of the cases have been finished yet.

The Bank of Slovenia had repeatedly rejected allegations that it mishandled data used when putting together a rescue package for Slovenia's banks.