Key future indicators of consumer confidence all sharply fell in September as Brits nervously awaited policy announcements in the Autumn Budget, according to fresh data.
GfK’s long-running consumer confidence index fell sharply to -20 in September overall, with all measures – including personal finances, economy and purchase intentions – down month-on-month.
“Headline consumer confidence has… taken us back to a similar level seen at the beginning of this year,” Neil Bellamy, consumer insights director at GfK, said.
“Despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new government,” he added.
On Thursday, the Bank of England voted to hold interest rates at five per cent as the bank continued with its policy of gradually lowering borrowing costs.
There were major corrections in the outlook for personal financials for the next 12 months, which was down nine points, consumer’s views on the general economy for the coming year, which fell 12 points, and the major purchase index, down ten points.
It seems the boost in consumer confidence this summer after the first interest rate cut since March 2020 has been overshadowed by fears around policy changes in the Autumn budget, which the Government has warned will be “tough”.
Prime Minister Keir Starmer and Chancellor Rachel Reeves have also been vocal about the dire state of the UK’s finances, which commentators warned would hurt consumer sentiment.
Bellamy said: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.
“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the budget decisions on 30 October.”
The major purchase index fell by ten points month on month to -23 as Brits continued to shy away from big-ticket items like home renovations.
The savings index fell ten points to +23; unchanged from this time last year.