British consumer confidence has fallen to its lowest level since comparable records began nearly 50 years ago, as the rising cost of living raises concerns about personal finances and the economic outlook.
in the monthly study Data provider GfKthe overall consumer confidence index score fell to -44 in August from -41 the previous month.
This is the lowest reading since equivalent data was first produced in 1974.
Falling confidence reflects gloomy mood across UK economy Price increased Real wages fell at a double-digit rate, the biggest drop in more than 20 years, amid a resurgence of strikes and mounting pressure on the public service.
The survey was conducted from August 1 to August 12, during which time Bank of England Predicting that the economy will soon plunge into a recession lasting more than a year as households struggle to pay their energy bills, energy bills could increase by more than 75% in October compared to now.
All five components that make up the overall consumer confidence index fell, prompting GfK director Joe Staton to say “anger over the UK economy is the biggest driver of these findings”.
“[They] Pointing to a sense of surrender, financial events are far beyond the control of the average person,” he said.
Linda Ellett, head of UK consumer markets, retail and leisure at KPMG, said a drop in confidence could soon dent retail sales, although figures have remained unchanged so far this year. “A general decline in spending power will lead to lower demand and changes in buying behaviour, both of which will impact the high street and the wider economy,” she said.
When people were asked about their personal finances, their scores over the past year were comparable to the lows of the 2008-09 financial crisis and the tightening period around 2012.
But expectations for how they will fare in the coming year will draw more attention. That number has dropped to -31, significantly lower than either of the previous two periods.
Negative scores reflect more people saying their personal finances are likely to worsen rather than improve in the year ahead.
“With headlines showing record inflation eroding household purchasing power, the personal financial stress for many in the UK is worrying,” Mr Statton said.
“Merely making ends meet has become a nightmare, with the crisis of confidence only getting worse with the dark autumn months and the colder months of winter.”
Households are similarly pessimistic about the overall economic outlook, with scores falling each month since December. In August, the index was -68, worse than the peak of the first coronavirus wave when the UK was in strict lockdown – albeit better than during the global financial crisis.
Households’ assessment of the UK economic outlook for the year ahead is -60, more pessimistic than at any time since the GfK began collecting data, and 54 percentage points lower than in August 2021.
With confidence in their own finances and economic status so low, families are naturally unlikely to say now is a good time to make a big purchase. The sub-index fell to -38, down 4 points month-on-month from -3 a year ago.
By contrast, as interest rates rise, there is a growing perception that now is a good time to save. If many people save more and spend less at the same time, it will accelerate the economic downturn expected this fall.