A long-running measure of consumer confidence has shown a significant drop in September, after warnings by the new government about the state of the public finances and a “painful” Autumn Budget to come.
Research firm GfK’s Consumer Confidence Index fell by seven points to -20 overall, with all measures declining in comparison to the previous month’s survey.
This takes us back to around the level seen at the start of the year, said Neil Bellamy, consumer insights director at GfK.
“All five measures are down but there are major corrections in the outlook for our personal financial situation for the next 12 months (down nine points), our views on the general economy for the coming year (down 12 points), and the major purchase index (down 10 points).”
These are key future indicators, Bellamy explained, which means that despite stable inflation and the prospect of further interest rate cuts, it is “not encouraging news” for the government.
With consumer spending accounting for around 60% of the UK economy, strong consumer confidence underpins economic growth.
The survey revealed that people’s view of their own personal finances in the future has turned negative again, from +6 to -3.
“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the Budget decisions on 30th October,” Bellamy said.
