UK consumer confidence is tanking warns KPMG
Three in five Brits believe the UK economy is worsening, a new survey by KPMG has shown, as Chancellor Rachel Reeves’ Spring Statement risks failing to lift people’s spirits.
Reeves is set to announce policies aimed at economic business confidence at her Spring Statement on Wednesday but a new survey suggests consumers are increasingly downbeat about the economy.
Just under half of respondents told One Poll, which was commissioned by KPMG, that they are planning to cut back spending on everyday items, as some 36 per cent of people said they are saving more as a contingency.
The survey of 3,000 consumers also showed that a growing number of people said they felt financially insecure.
One in 50 people said they are now incurring debt to pay their bills.
The latest data showing a slump in consumer confidence sends a final warning to the Chancellor ahead of her Spring Statement.
The Chancellor is not expected to provide relief to consumers, or make changes to taxes.
Meanwhile, her tax hikes, announced in the Autumn Budget, are set to bite businesses in April.
Those taxes include increases to national insurance contributions (NICs) and changes to inheritance tax bands.
It means more people will have to pay taxes on assets from next month as the government seeks to take in an extra £40bn in tax receipts.
Businesses are also likely to pass on costs to consumers, according to various surveys, with the Bank of England predicting inflation to hit a peak of 3.75 per cent this year.
Consumers are already responding to high inflation of around three per cent in January as Brits have eaten out less and bought fewer clothes, according to the survey.
Linda Ellet, KPMG’s head of consumer and detail, said the research shows that most people think the economy is “heading in the wrong direction”.
“This nervousness about the economy is leading many, including some of those who are secure in their current personal financial circumstances, to cut everyday spend, defer big ticket buying, and save more.
“Cautious consumers are certainly preparing for the potential impact on them from what they believe to be a worsening economy.
Ellet also said the Chancellor should try to rectify consumer confidence.
“This week’s Spring Statement needs to give people confidence in the longer-term UK economic outlook,” she added.