This was despite retail sales figures, which came in slightly better than expected in November, showing a 0.4 per cent rise on the month.
However, analysts said the figures were supported by sharp discounting, indicating that retailers were becoming less confident in their pricing power and believed that there was an increasing need to offer incentives for consumers to shop.
Indeed most analysts expected consumer spending to slow markedly in 2008.
In contrast most analysts expect the European Central Bank to keep eurozone interest rates on hold at 4 per cent in the first quarter of 2008 amid concerns over growing inflationary pressures in the region.
The pound dropped to a low of £0.7256 against the euro, its weakest level since the launch of the single currency in 1999.
However, the pound edged 0.1 per cent higher against the dollar to $1.9850.