By Svenja O'Donnell Oct. 31 (Bloomberg) -- U.K. consumer confidence dropped in October close to the weakest level since at least 1974 as the financial crisis spooked British shoppers, GfK NOP said. An index of sentiment, based on a survey of 2,002 people between Oct. 3 and Oct. 19, fell 4 points from the previous month to minus 36, GfK said today in London. A gauge of consumers' willingness to make major purchases dropped 11 points to minus 42, the lowest since the series began in 1974. House prices fell from a year earlier by the most since at least 1991 this month as banks tightened their grip on credit, Nationwide Building Society said yesterday. Policy makers will probably lower the benchmark interest rate by a half point to 4 percent next week, after they voted for an emergency cut on Oct. 8 to save the financial system from collapse, economists say. ``The turmoil surrounding the banking world and subsequent turbulence in the financial markets is making for an uncertain time,'' Rachael Joy, a spokeswoman for GfK, said in a statement. ``Even the reduction of the interest rate and lower petrol prices are unlikely to have a significant effect on confidence in the upcoming months as consumers brace themselves.'' The consumer confidence gauge was last lower in July, when it reached minus 39, the weakest in at least 34 years, GfK said. A gauge of the general economic situation over the past 12 months fell 10 points to minus 72, the survey showed. An index measuring Britons' personal financial situation in the next year fell one points to minus 12, GfK said. Bank Rescue The financial crisis has crippled Britain's banking industry, forcing the government to buy stakes in some of the country's biggest lenders and ramp up public spending. Policy maker David Blanchflower said this week the current crisis may turn out to be ``more significant'' than the aftermath of the 1929 stock market crash. He said that the economy faces a recession for the next year and warned it will deepen if the central bank doesn't cut interest rates ``significantly.'' The economy shrank 0.5 percent in the third quarter, the largest contraction since 1990. Unemployment rose in September, with jobless claims reaching the highest in almost two years. The Bank of England will cut the benchmark interest rate by at least a half point at the next scheduled meeting on Nov. 6, according to 28 economists in a Bloomberg News survey. To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.

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