Consumer confidence in the UK has fallen at the fastest rate outside the Covid pandemic since the 2016 Brexit vote as the escalating economic damage from the war in the Middle East hits Britain.
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damage → fall → Britain
With less than a week before John Healey’s first budget, the latest barometer from the data company GfK indicated confidence plunged by 11 percentage points in October to -24 amid pressure on consumers from the rising cost of living.
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confidence → indicate → living
Highlighting the challenge for Andy Burnham and his chancellor before the statement on Wednesday, GfK said its consumer confidence index last fell by this much in a single month in July 2016, following the shock leave result in the EU referendum.
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index → highlight → referendum
The index – which has been closely tracked by the government and the Bank of England for early warning signs from the economy since the early 1970s – recorded its largest ever fall, of 25 points, in March 2020 just after the start of the first UK lockdown.
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which → track → lockdown
The latest snapshot represents a marked change from the summer, when GfK said a “Burnham bounce”, along with a strong World Cup run by the men’s England football team and sunny weather, lifted the mood of consumers in its long-running monthly survey.
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bounce → represent → survey
Neil Bellamy, consumer insights director at GfK, said: “Relentless cost-of-living pressures, against an international backdrop of unresolved regional conflicts that are themselves contributing to domestic inflation now at 3.5%, appear to have swept aside the nascent optimism we saw following the appointment of a new UK prime minister this summer.”
It comes as consumers face a fresh squeeze on living standards triggered by the unfolding war in the Middle East. Petrol and diesel prices have surged close to record highs and energy bills have increased in advance of a difficult winter for households already feeling the pinch from years of price increases.
Over the past five years analysis by the Trades Union Congress shows that UK households have paid almost £14,000 on average in additional costs for mortgages, loans, energy and water bills.
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households → say → mortgages
With less than a week before his tax and spending speech to the Commons, the chancellor is under pressure to take action to support households amid warnings that consumer energy bills could reach £2,000 a year from January for the typical household.
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bills → take → household
Healey has pledged to use his statement to announce “breathing space” measures to ease the pressure.
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Healey → pledge → pressure
However, he has also warned that the government has limited resources to intervene as the Middle East conflict pushes the UK’s borrowing costs to the highest level in decades.
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conflict → warn → decades
Official figures released on Wednesday show headline inflation rose by more than expected to 3.5% last month, while the government deficit was a worse-than-forecast £24.5bn.
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deficit → release → forecast
In a double blow for the chancellor, the twin pieces of bad news underscore the fact that consumers are facing a renewed cost of living squeeze, just as Healey is also under increased financial pressure.
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Healey → underscore → pressure
According to the latest figures from GfK, consumers became less confident about the strength of their own personal finances, as well as the general outlook for the British economy at large.
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consumers → accord → economy
The major purchase index fell by 14 points to -22 in October, suggesting that consumers could be bracing to cut back on spending over the winter months to make room in their finances for higher energy bills.
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consumers → fall → bills
Separate figures from the CBI show investment intentions among manufacturing businesses were subdued as cost pressures remained high in the three months to October.
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pressures → show → October
Manufacturing output is expected to stabilise in the next three months, according to the lobby group’s latest Industrial Trends Survey.
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output → expect → Survey
However, cost pressures for businesses remained elevated.
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pressures → remain → businesses
Cameron Martin, senior economist at the CBI, said: “If the government wants to meaningfully tackle the cost of living, it must give manufacturers the breathing space to invest and drive the productivity growth needed to sustain rising real wages.
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it → say → wages
“Next week’s budget must deliver this by cutting business electricity costs, reducing labour costs and reforming business rates to support rather than hinder investment and growth.”
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budget → deliver → investment
The Treasury has been approached for comment.
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Treasury → approach → comment
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