UK Consumer Sentiment Declines Due to Fiscal Concerns, Trade Body Reports

By David Milliken

LONDON – Recent developments from the new Labour government in the UK have led to a noticeable decline in consumer confidence, according to a survey released by a trade body. This decline follows the government’s decision to abolish a welfare benefit for pensioners and announce potential tax increases in the upcoming budget.

The British Retail Consortium (BRC) reported that households’ views on the economic situation for the next three months dropped to -21 in September, down from -8 in August. This figure, which represents the gap between positive and negative consumer sentiments, is the lowest since the survey first recorded a reading of -23 in March.

BRC Chief Executive Helen Dickinson noted that negative press about the UK’s financial status appears to have impacted economic confidence, particularly among older individuals.

This month’s survey marks the first publication of results by the BRC, which were derived from responses from 2,000 adults surveyed by market research firm Opinium between September 10 and 13.

The findings align with a prior report from the GfK consumer survey, which reached a six-month low this month, largely due to anxieties surrounding the upcoming budget.

Following their election in July, Prime Minister Keir Starmer and finance minister Rachel Reeves pledged to restore the economy after contending with what they described as the most challenging economic conditions in over seven decades.

Reeves announced the removal of a £200 annual fuel subsidy for 10 million pensioners and indicated that tax increases could exceed earlier expectations set before Labour’s election win.

The BRC survey further revealed that households’ evaluation of their personal financial outlook fell to -6 from -1, marking its lowest level since the survey began, though intentions to spend showed a slight increase from -9 to -8.

Recently, S&P Global noted a slowdown in business activity, as many companies chose to postpone plans while awaiting clarity on upcoming changes to taxation and employment laws. Conversely, a separate survey by the Recruitment and Employment Confederation indicated that employer sentiment for the third quarter of 2024 was somewhat less pessimistic compared to the previous quarter ending in June.