'Alarming' drop in UK consumer confidence since Rachel Reeves's Budget misery

Consumer confidence in Britain's future economic prospects has nosedived over the past year, new data reveals. Confidence has crashed by 31 points during the last 12 months, tumbling from an average of minus nine between May and July 2024 to an average of minus 40 between May and July this year, Which?'s Consumer Insight Tracker demonstrates.

Between this May and July, 56% of Britons, on average, believed the economy would deteriorate, while only 16% expected improvement. This comes after Chancellor Rachel Reeves's Autumn Budget of tax hikes kicked in in "Awful April", pushing inflation up to 3.5% as household bills soared. Which? described the statistics as showing a "significant fall" to some of the most dire levels witnessed since early 2023, when the cost-of-living crisis dominated headlines and inflation soared into double digits.

Economic confidence plunged sharply last autumn and hit particularly bleak levels from February to May, when global developments, including US tariff policy, fuelled the gloom. Confidence has shown modest signs of recovery since then, but stays markedly lower than a year ago.

Pensioners have emerged as the most downbeat demographic, with their faith in Britain's economic future collapsing catastrophically from an average of minus five between May and July last year to a present average of minus 63.

Retirees' confidence plummeted dramatically soon after the Government's initial announcement to axe winter fuel payments for most pensioners. Which?'s data showed confidence has remained low since, despite the Government's reversal on these plans.

Which?'s data indicates that the financial hardships from the peak of the cost-of-living crisis have yet to revert to pre-crisis levels.

In the month leading up to July 18, it is estimated that around 2.1 million households missed at least one essential payment, such as rent or mortgage payments, utility bills, credit card or loan payments.

It's also estimated that nearly half (49%) of UK households, equating to 13.9 million, made at least one adjustment to cover essential spending like utility bills, housing costs, groceries, school supplies and medicines in the last month - measures included cutting back on essentials, dipping into savings, selling possessions or borrowing.

Rocio Concha, Which? director of policy and advocacy, said: "Our research shows consumer confidence in the future of the UK economy has dropped alarmingly over the last year. The Government has rightly focused on growing the economy and raising living standards, but in doing so, it must not overlook the importance of consumer protections in restoring confidence.

"People are sick to the teeth of having to dodge fraudsters when shopping online, watching out for rogue traders when making home improvements and needing to keep an eye out for dodgy pricing practices which mean that offers aren't as good as they first appear.

"The right consumer protections give people the confidence to spend, and the Government must place these protections at the heart of its plans to grow the economy."