Consumer confidence dropped in February amid concerns about the future outlook for the Irish economy in general and the jobs market in particular.

A survey carried out on behalf of IIB Bank and the ESRI has shown that the consumer sentiment index last month was 62.3, down from 64.5 in January. A contracting jobs market and uncertainty about the effects of a possible war in Iraq are thought to have played a significant role in the drop in confidence.

"People are a lot gloomier about the outlook going forward for the economy," said Mr Austin Hughes, chief economist with IIB Bank. "\ fits neatly with the story coming from the live register." However, he said the results reflected a realistic attitude among consumers to the increasingly uncertain economic prospects rather than any immediate shortage of cash. This suggests the economy is in a process of controlled slowdown rather than meltdown.

"Basically, sentiment is weakening but it is weakening in a controlled fashion," he said. He predicts spending and sentiment to remain sluggish in the coming months as people try to "ride out" the economic difficulty but significant price reductions could compel them to spend.