Consumer confidence in the UK is weaker than during the four major recessions of the last half century as rapidly rising inflation weakens morale.
Although the UK has not technically entered a recession yet, the latest sentiment barometer from data company GfK found the public more pessimistic than at any time since the survey began in January 1974.
The monthly look at confidence found that the relatively optimistic mood when Britain emerged from lockdown in 2021 had been replaced by deeper pessimism as the annual rise in the cost of living climbed to a 40-year high from 10 ,1%.
In gloomy news for businesses that rely on consumer spending, the public mood is now more pessimistic than it was during the recessions of the mid-1970s, early 1980s, early 1990s and late 1990s. from the 2000 one.
The period covered by the survey also covers the three-day week of 1974, the pound sterling crisis of 1976, and the pound’s expulsion from the European exchange rate mechanism in 1992, none of which were marked by a state of public mood so gloomy.
Sentiment has been falling steadily throughout 2022 and fell another three points to a record low of -44 in August. A year ago the index stood at -8.
Consumers are pessimistic about the prospects for their own finances in the year ahead (-31) as a sharp increase in the energy price cap looms in October, but even more pessimistic (-60) about the prospects for the economy.
Joe Staton, director of client strategy at GfK, said there was a drop in all five measures that made up the overall index of consumer confidence, reflecting “serious concerns” about the rising cost of living.
“A sense of exasperation with the UK economy is the main driver of these findings. Our sub-measure on the overall economy over the past year has decreased month-over-month since December 2021.”
Staton said that since the end of last year there had been a similar and marked decline in how consumers viewed the economy, with an August score of -60, a new record.
“These findings point to a sense of capitulation, of financial events that are far beyond the control of ordinary people. With headline after headline revealing that record inflation is eroding household purchasing power, the pressure on the personal finances of many in the UK is alarming. Making ends meet has become a nightmare and the crisis of confidence will only worsen with the darker days of autumn and the colder months of winter.”
The latest preliminary estimates of consumer spending released Thursday by the Office for National Statistics showed the number of restaurants unchanged in the week to Aug. 14, while credit and debit card payments were down seven percentage points.
Linda Ellett, UK director of consumer, retail and leisure markets at KPMG, said: “The storm clouds are now fast approaching, with higher costs reducing the discretionary spending power of even more households this autumn and winter. .
“Year to date, retail sales have somewhat defied very low levels of consumer confidence. But a general reduction in spending capacity will lead to drops in demand and changes in purchasing behavior, both of which will affect the economy on the street and in general.