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Shopper confidence fell greater than anticipated in November as households grew more and more pessimistic about their spending and the UK’s financial outlook, suggesting they’re “bracing for troublesome information” in subsequent week’s Autumn Price range.
The GfK shopper confidence index — a measure of how individuals view their private funds and broader financial prospects — dropped by 2 factors to minus 19, the analysis group mentioned on Friday.
That is effectively beneath the 2014-2019 common of minus 5.6 and decrease than a prediction from economists polled by Reuters, who anticipated minus 18.
There was a deterioration of public views throughout all measures tracked by the index, together with previous and future assessments of private funds and the overall financial state of affairs, in addition to intentions for main purchases.
Neil Bellamy, shopper insights director at GfK, mentioned the figures have been a “bleak set of outcomes” forward of Rachel Reeves’ Autumn Assertion.
“A fall throughout all 5 measures suggests the general public is bracing for troublesome information, with little within the present local weather to raise expectations,” he added.
Within the Price range on November 26, Reeves is predicted to lift taxes and minimize spending by between £25bn and £30bn to satisfy her fiscal guidelines with a bigger headroom than in March.
Freezing the edge on revenue tax, which would push extra individuals into greater tax charges, taxes on the highest-value properties and new playing duties are among the many choices on the desk.
Respondents have been surveyed within the first two weeks of November, throughout which the federal government ditched the plan to lift revenue taxes and paved the way in which for a so-called smorgasbord of small tax raises.
Shopper confidence is carefully watched as an early indicator of shopper spending, which has been very weak within the UK because the pandemic.
GfK reported that spending intentions on main purchases, resembling furnishings or electrical items, fell 3 factors to minus 15 in November, effectively beneath the 2014-2019 common of plus 3.
Bellamy mentioned that the drop in that index was “troubling right now of yr” because it suggests “households are tightening their grip simply as retailers transfer into a vital buying and selling interval”.
Shopper confidence reached a three-year excessive of minus 13 when Labour took workplace in July 2024, however fell sharply forward of the 2024 Autumn Price range and is but to get well.
The downturn follows a pointy divergence in sentiment since Labour’s landslide election win, with confidence dropping amongst over-50s however persevering with to rise amongst youthful voters.
