Britons are growing increasingly pessimistic about their personal finances and job prospects, a new survey has found, raising concerns about the health of the UK’s economic recovery.
The S&P Global consumer sentiment index, a closely-watched measure of household confidence, dropped to a nine-month low in November. The index now stands at 42.5, down from 47.6 in October, signalling a marked deterioration in consumer morale.
The data suggests Chancellor Jeremy Hunt’s recent Autumn Statement, which included a raft of tax rises and spending cuts, has done little to allay public anxiety about the economic outlook. With the cost-of-living crisis continuing to squeeze household budgets, many Britons are now bracing for tougher times ahead.
“The latest consumer sentiment data makes for grim reading,” said Economist Olivia Parkes at S&P Global. “Worries about job security and family finances have intensified, reflecting the mounting pressures facing households as we head into the new year.”
The survey found consumers’ expectations for their personal financial situation over the next 12 months fell to the lowest level since February 2021. Just 17% of respondents said they expect their finances to improve, compared to 27% who anticipate a deterioration.
Concerns about job security were also elevated, with the index tracking this metric dropping to 44.3 from 48.5 the previous month. Economists say this reflects growing nervousness about the labour market, with many businesses scaling back hiring or announcing redundancies.
“The combination of surging inflation, rising interest rates and the prospect of a prolonged recession is really taking a toll on consumer confidence,” said Parkes. “People are understandably worried about their livelihoods and ability to make ends meet.”
The gloomy sentiment data comes after the Bank of England warned the UK is likely already in recession, with the economy expected to contract well into next year. Policymakers have forecast the downturn could be the longest on record, surpassing even the financial crisis of 2008-09.
Against this backdrop, the government faces the challenge of restoring faith in the economy and supporting households through the cost-of-living crunch. Analysts say decisive action will be needed to prevent the slide in confidence from becoming entrenched.
“Restoring a sense of optimism will be crucial if the UK is to weather this storm,” added Parkes. “The Chancellor will need to carefully calibrate his policies to ease the burden on ordinary families and businesses.”
