Consumer confidence slumps to year-low as households brace for ‘dark days ahead’

Consumer confidence in the United Kingdom has decreased sharply to its lowest point in more than a year, according to the latest GFK data, indicating that families are pessimistic about both personal financial resources and the broader economic expectations.

January numbers show the total consumer confidence index in GFK a decrease in five points from December to -22, and the weakest reading of it since December 2023. Neil Bilami, director of consumer visions at Niq GFK, said that the results reflect that “consumers do not think about things change for the better.” , Warning from “dark days” amid doubts about the economy.

All the five measures that contributed to the index decreased this month. The expectation scale for the economy has declined over the next year by eight points to -34, while the personal finance decreased three points to -2. Meanwhile, the savings index has risen nine points to +30, as consumers seem to hold more money. Economists believe that this can hinder growth if a fewer families spend and choose more savings.

The Bank of England is expected to reduce interest rates twice this year from the current 4.75 percent, but many analysts doubt that there will be deeper discounts. Family budgets are still compressed due to the high borrowing costs, which helped reduce the main purchasing index by four points to -20.

Consumer confidence numbers are closely monitored because spending has a significant impact on GDP growth. Increased confidence often leads to high consumption; On the other hand, it can reduce the confidence of domestic spending and discourage economic performance.

Several months of recession from July to November – which covers the initial period of the work government in his position – confirm the broader economic difficulty in the United Kingdom. The budget of Chancellor Rachel Reeves, which included 40 billion pounds in the tax increase and a significant increase in national insurance contributions to employers, has also demonstrated optimism and employment plans in business, according to official statistics and special surveys.

Speaking of speculation that Reeves may need to raise taxes further or reduce public spending to support government financial affairs. Speaking at the World Economic Forum in Davos, she insisted that the financial rules of the new administration are the “basic basis” of economic stability. The budget responsibility office is scheduled to return to the updated predictions on March 26, a step that can stimulate new policy advertisements, which may put more pressure on consumer morale.