Consumer confidence in the UK declined in October, with pessimism about the upcoming Budget outweighing optimism from falling inflation, according to GfK’s latest consumer confidence index.
The index slipped by one point to -21, marking its lowest reading since March and underscoring the challenges the Labour government faces in bolstering economic optimism since coming to power in July.
GfK’s survey results suggest that households are bracing for substantial fiscal changes as Chancellor Rachel Reeves prepares her maiden Budget, expected to include around £40 billion in tax increases. Potential rises include subjecting employers’ pension contributions to National Insurance and capital gains tax hikes, measures that have heightened consumer anxiety.
“As the Budget statement looms, consumers are in a despondent mood despite a fall in the headline rate of inflation,” said Neil Bellamy, GfK’s consumer insights director. The Labour government’s anticipated tax increases and overall fiscal tightening seem to have overshadowed recent improvements in inflation and GDP growth forecasts.
Economic and personal finance worries rise
The general economic situation index, which measures confidence in the economy over the past year, fell by one point to -28. This decline reflects consumer unease about the country’s economic performance despite encouraging signals, such as the International Monetary Fund’s upward revision of UK GDP growth from 0.7% to 1.1% for the year.
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