Budget knocks confidence to two-year low amid ‘deteriorating conditions’
Households’ nerves about future finances has jumped to a two-year high, a top survey has indicated, with extra taxes expected to dampen activity in the UK economy.
S&P Global researchers have said that Britons were more pessimistic about their financial health over the next twelve months than at any time since December 2023, with confidence levels dropping for the third consecutive month.
They also revealed that London was the only region to see household expectations remain in positive territory, though negative sentiment levels for the coming 12 months were still at their worst level in two years.
Falling consumer confidence data reflects Britons’ frustration at the Budget in late November after Rachel Reeves failed to persuade voters that cost of living pressures would be eased.
The headline consumer sentiment index stood at 44.7 in December, edging further away from the 50-figure mark for neutrality in confidence.
The household finance index survey was 42.4, with expected finances for 12 months falling to 44.2.
Budget leaves Brits more fearful about their jobs
S&P Global economist Maryam Balunch said the results make for “disappointing reading” after the Budget.
“Sentiment towards the financial outlook over the coming 12 months has soured to the gloomiest in two years,” Balunch said.
“Current financial conditions facing households also reportedly deteriorated at an increased rate in December, driven by a further marked reduction in cash available to spend and a rising need to take on more debt.
“Not surprisingly, spending intentions have worsened in this deteriorating financial environment, suggesting consumers are unlikely to provide much of a boost to the economy as we head into 2026.”
The survey also tracked falling confidence levels in the UK labour market, with vacancies dropping in each of the last 39 three-month periods and the number of payrolled employees declining over the last year.
People’s job security at work hit a six-month low while sentiment about income from employment dropped to a nine-month low after a period of high wage growth levels in the private sector.
Those who were most fearful about their jobs worked in IT, construction and financial services.
Job security was also stronger among higher earners in the UK economy.