Consumer confidence in the UK has experienced a significant decline, according to recent data from GfK's long-running measure. The index plunged by seven points to -20 in September 2024, indicating growing anxiety among families about their finances and the overall economic situation.
Neil Bellamy of GfK attributed this drop to several factors, including "the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare." The winter fuel payment scheme, designed to assist older individuals with heating costs, has been a crucial support for many households.
The outlook for the coming year appears particularly bleak, with the measure of economic expectations for September 2025 falling 12 points from the previous month to -27. This pessimism extends beyond consumers to the business sector, as reported by both the Institute of Directors and the Confederation of British Industry.
Prominent business figures have expressed concern about the current economic narrative. Sir Philip Hampton, former chairman of several major UK companies, emphasized the need for political leadership to inspire confidence:
"The more politicians are gloomy of course the more these sort of animal instincts are going to be constrained. I do think that there's a job of political leadership to remind people that innovation, discovery and change can happen even within a very financially constrained Government."
Sir Martin Sorrell, executive chairman of S4 Capital and founder of WPP, highlighted the impact on business confidence:
"We are not getting stability at the minute, which is probably the reason why consumer confidence is declining. Clients are also worried about stability, so they're not willing to invest."
The decline in consumer confidence is reflected in households' reduced willingness to make large purchases, suggesting a potential contraction in spending. This trend is particularly pronounced among older demographics, likely influenced by changes to support schemes like the winter fuel payment.
Experts are calling for a more positive message from the government. Jagjit Singh Chadha, director of the National Institute of Economic and Social Research, stressed the need for a more courageous approach to addressing economic challenges.
Andrew Wishart, senior UK economist at Berenberg, noted that falling interest rates and low inflation should typically boost consumer confidence. He suggested that the government's tone ahead of the October 2024 Budget is a significant factor in the current decline.
As the UK faces these economic uncertainties, the interplay between political messaging, consumer confidence, and business sentiment will be crucial in shaping the country's economic trajectory in the coming months.