UK consumer confidence has reached a 50-year record low in the last few months. The consumer confidence index stood at -47 points in October and -49 points in September, representing an all-time low since the launch of the records in January 1974. The alarming nature of these values is highlighted by records from over a year ago when the consumer confidence index was reported to be at -8 points in August 2021. Moreover, an even more significant decrease of three points occurred in the sub-index for large purchases such as vehicles and properties, according to GfK reports. This number represents a record low since the pandemic’s beginning and will create more uncertainty for businesses, particularly those in the non-essential category. This is because consumers have already and will likely continue changing their behaviour to reduce spending habits, as highlighted by reports from PWC, who state that 86% of the UK public is concerned about affording daily living costs.
The GfK consumer confidence index is an economic indicator of how consumers view their financial situations and the overall state of a country’s economy. The index provides key information for determining the saving, borrowing, and spending patterns of consumers and the general health of the economy, as low levels of consumer confidence are often representative of an economic downturn.
UK consumers have struggled to feel optimistic about the country’s current and future economic conditions due to an alarming combination of political uncertainty, increasing borrowing costs, the highest inflation since the 1980s, and ongoing social conflict stemming from various matters such as strike action and Brexit. Furthermore, the low levels of consumer confidence in the UK also pose worrying concerns for businesses with the Christmas season right around the corner, when significant impacts on annual profits are often made and balance sheets are boosted.
According to Joe Staton, a client strategy director at GfK, “a web of uncertainty and turmoil” has worried British households and brought concerns about the likelihood of increased taxation, potential spending cuts, and an even higher cost of living. Following the mini budget and the resulting market chaos, Linda Ellett from KPMG explains that uncertainty surrounding energy prices and mortgage rates will constitute some of the most “significant cost concerns that will play on the minds of many consumers over the coming months”.