Cascade of ‘cheerless’ economic news weighs on consumer confidence

A cascade of “cheerless” news about the health of the UK economy has caused consumer confidence to plummet.

Severe petrol and food shortages, compounded by soaring energy costs and wider inflationary pressures has engineered a cost of living crisis in the UK and stalled the economic recovery.

As a result, consumer confidence slid to minus 17 in October, its lowest level since the country was in the teeth of the worst Covid-19 measures, according to research by GfK.

The drop was driven by weakening optimism about the British economy over the next year, which plunged 10 points to minus 26.

Global supply chains buckling under the weight of global demand roaring back as economies emerge from Covid-19 lockdowns has generated shortages of components used by firms across the economy, which has slowed the UK’s economic recovery.

According to the Office for National Statistics, output jumped 0.4 per cent in August, leaving the economy 0.8 per cent smaller than it was before the pandemic struck.

Joe Staton, client strategy director at GfK, said: “Against a backdrop of cheerless domestic news – fuel and food shortages, surging inflation squeezing household budgets, the likelihood of interest rate rises impacting the cost of borrowing, and climbing Covid rates – it is not surprising that consumers are feeling down-in-the mouth.”

Brits’ outlook for their personal financial situation clouded last month, dropping four points, driven by looming tax hikes and concerns inflation will progress at a fiery clip over the coming months.