UK consumer confidence at its lowest level in nearly 50 years

UK consumer confidence is at its lowest level in nearly 50 years, according to a closely watched survey as the country prepares to face a protracted recession.

The GfK research team said the consumer confidence index, a measure of how people view their personal finances and the broader economic outlook, rose just two points to minus 42 in December from a month ago. before. The average since the index started is negative 10.

Over the past year, Britons have been hit by soaring prices that are stretching household budgets across the country. Energy prices skyrocketed after Russia’s invasion of Ukraine in February, and many consumers have little money left after paying their energy and food bills.

Since the survey began in 1974, the index never dropped below minus 40 until May 2022, with the onset of double-digit inflation. It remains below that level, marking the longest period of low confidence in nearly half a century.

Column chart of the GfK consumer confidence index shows UK consumer confidence at its longest-ever low on record

Joe Staton, director of client strategy at GfK, warned “of a difficult road ahead” because of the UK’s dismal economic outlook. “Real wages are falling as inflation continues to plummet, further straining the discretionary budgets of many households as we enter the final shopping days before Christmas,” he added.

Inflation eases increased slightly to 10.7% in November from a 41-year high of 11.1% in October. Food inflation rose to 14.6%, the highest since 1980.

The UK economy fell in the third quarter with business surveys, such as the purchasing managers’ index, pointing to further economic contraction in the past quarter.

Both the Bank of England and the Office for Budget Responsibility forecast a protracted recession as high inflation continues to hit household finances into 2023.

Linda Ellett, KPMG UK head of consumer, retail and leisure, said: “While Christmas will bring some laid-back respite, the fundamentals are working. This low consumer confidence will continue into the new year.”

The GfK survey, based on data collected over the first 10 days of December, shows Britons’ confidence in their personal finances for the next year remains at its lowest level on record.

As a result, nearly two-thirds of people have reduced non-essential spending and used less energy in their homes, according to an ONS survey released on Thursday. Nearly half of respondents said they were buying less food.

“Without an immediate outlook on financial good news, it’s unlikely we’ll see a rebound in confidence anytime soon,” Staton said.

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