Consumer confidence drops ahead of Budget
Brits’ confidence has fallen as nerves grow over the possibility tax rises in the upcoming November Budget.
GfK’s Consumer Confidence Index decreased by two points to -19 in September, with all measures down in comparison to last month.
“There’s an autumnal chill in the air this month,” Neil Bellamy said. “With tax rises expected in the November Budget, the risk is that confidence inevitably falls, just like the autumn leaves.”
Chancellor Rachel Reeves faces the uneviable task of finding £25bn in taxes or saving to restore her headroom if she sticks by her fiscal rules, according to Deutsche Bank.
Proposals include changes to taxes on property, rental income, pensions, gambling and inheritances.
The British Retail Consortium similarly found that consumer confidence dropped in September.
Expectations of the state of the overall economy worsened to -36 in September, down from -32 in August, while Brits’ personal financial situations also slipped to -7 in September.
“Worries about the Budget, combined with the increase in the cost of living, have eroded confidence, with little sign that inflation will come down soon,” chief executive of the British Retail Consortium, Helen Dickinson, said.
Confidence in personal finances drops
Brits’ confidence in their personal finances dropped three points to minus seven in September, while the forecast for personal finances over the next 12 months fell one point to four.
As well as the possibility of higher taxes, food costs continue to rise: Core food price inflation was 5.1 per cent over the 12-month period, higher than the previous month. It was the fifth consecutive rise for the figure.
Too-high food and services inflation led the Bank of England to hold interest rates on Thursday, with the governor warning that “we’re not out of the woods yet”.
Bellamy added: “The 7 August decrease in interest rates does not appear to have provided any obvious boost to the financial mood of consumers or drawn attention away from day-to-day cost issues.”
“Looking at the economy, sentiment is sliding sharply.”