Bank of England says fear of rising redundancies and concerns over shopping health risks are limiting spending.Fears of rising redundancies and concerns about the health risks of high street shopping have hit consumer confidence, according to a closely watched survey that flatlined last month.

The GfK barometer for July showed confidence petering out, despite rising in May and June. It came as a senior Bank of England policymaker warned Britain’s recovery from the Covid-19 pandemic would be hampered while concerns about catching the virus and fears of redundancy limited spending.

In a message that casts doubt on a  V- shaped recovery, Jonathan Haskell said a fear of redundancy was likely to prey on the minds of workers, meaning they will save vital funds and not spend them over the coming months.

Haskell, a member of the central bank’s interest rate setting committee, said a Bank of England model of the Covid-19 impact that assumes the easing of the lockdown will bring the economy back to its pre-crisis level by next year was likely to prove optimistic.

GfK spokesman Joe Staton, said: “There’s been little to boost the public’s mood as the cost of the pandemic to the UK’s economy is becoming apparent. Amidst significant job losses and the end of the furlough scheme, it is perhaps surprising consumer confidence has held steady,” he added.

However, a separate survey gave some cause of hope in the services sector as it emerged that trade at restaurant and pub chains in England has gathered pace. While custom remains well below pre-Covid levels, sales data from hospitality groups show that trade reached nearly 70% of normal levels in the second week after lockdown restrictions were eased.

That compares to 55% on the weekend that hospitality firms reopened and 60% for the first week, according to the Coffer Peach Business Tracker, which collects information from chains such as Pizza Express and the Greene King pubs group.