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Liz Truss cost of living support fails to prevent new consumer confidence low

Liz Truss Presents Plan To Mitigate Surging Energy Costs
The government did not provide OBR forecasts with their tax-cutting mini-budget last week

Liz Truss’s cost of living support has done nothing to lift Brits’ optimism out of the doldrums, a closely watched survey published today reveals.

Consumer confidence collapsed five points over the last month to minus 49, the lowest since research firm GfK started tracking the figures in 1974.

The survey was carried out between early and mid September, meaning it captured households’ response to the prime minister announcing on 8 September energy bills will be frozen for two years at £2,500 from October.

Consumers are being crushed by inflation hovering around a 40-year high for several months, tax hikes and rising interest rates.

UK consumer confidence has collapsed this year

Consumer confidence has dropped to a new record low despite Liz Truss ramping up cost of living support
Consumer confidence has been negative since the Brexit vote (Source: GfK)

Prices are up 9.9 per cent over the last year, forcing the Bank of England yesterday to sign off a second 50 basis point rate hike in a row, taking borrowing costs to 2.25 per cent, the highest since November 2008.

Such moves are rare. In the Bank’s 25 years of independence, it has never lifted rates by more than half a percentage point.

“Consumers are buckling under the pressure of the UK’s growing cost-of-living crisis driven by rapidly rising food prices, domestic fuel bills and mortgage payments,” Joe Staton, client strategy director, GfK.

The survey’s main indicators dropped sharply.

Confidence in the UK economy over the next year fell eight points to minus 68, while Brits’ optimism in their future personal financial situation shed nine points to tumble to minus 40.

Bank Governor Andrew Bailey and the rest of the monetary policy committee yesterday warned Britain may already be in the teeth of a technical recession, defined as a two consecutive quarters of GDP contraction.

Truss’s chancellor, Kwasi Kwarteng, will today in a mini-budget inject further support into the UK economy.

He is anticipated to reverse the six percentage point corporation tax rise and cut stamp duty. Yesterday, the government confirmed the 1.25 percentage point national insurance rise will be reversed on 6 November and the health and social care levy will be scrapped.

Taxpayers are already paying for household energy bills and half of businesses’ gas and electricity costs.

GfK’s consumer confidence index has been negative ever since the Brexit referendum.