Consumer confidence in the UK has fallen sharply to its lowest point in over a year, according to the latest GfK data, suggesting that households are pessimistic about both personal finances and the wider economic outlook.
Figures for January show the overall GfK consumer confidence index dropping five points from December to -22, its weakest reading since December 2023. Neil Bellamy, consumer insights director at NIQ GfK, said the results reflect a sense that “consumers don’t think things are changing for the better”, warning of “dark days ahead” amid gathering doubts over the economy.
All five measures contributing to the index were down this month. The gauge of expectations for the economy over the coming year tumbled by eight points to -34, while the personal finances measure dipped three points to -2. Meanwhile, the savings index climbed nine points to +30, as consumers appear to be holding on to more cash. Economists believe this could hamper growth if fewer households spend and more choose to save.
The Bank of England is expected to lower interest rates twice this year from the current 4.75 per cent, but many analysts doubt there will be deeper cuts. Household budgets remain squeezed by higher borrowing costs, which have helped to drive down the major purchases index by four points to -20.
Consumer confidence numbers are monitored closely because spending has a large impact on GDP growth. Rising confidence often leads to higher consumption; falling confidence, in contrast, can curtail household spending and dampen economic performance.
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