{"id":1382,"date":"2024-09-20T08:09:47","date_gmt":"2024-09-20T08:09:47","guid":{"rendered":"https:\/\/letiga.com\/index.php\/2024\/09\/20\/uk-consumer-confidence-tumbles-as-households-fear-painful-budget-uk-debt-hits-100-of-gdp-business-live-business\/"},"modified":"2024-09-20T08:09:47","modified_gmt":"2024-09-20T08:09:47","slug":"uk-consumer-confidence-tumbles-as-households-fear-painful-budget-uk-debt-hits-100-of-gdp-business-live-business","status":"publish","type":"post","link":"https:\/\/letiga.com\/index.php\/2024\/09\/20\/uk-consumer-confidence-tumbles-as-households-fear-painful-budget-uk-debt-hits-100-of-gdp-business-live-business\/","title":{"rendered":"UK consumer confidence tumbles as households fear \u2018painful\u2019 budget; UK debt hits 100% of GDP \u2013 business live | Business"},"content":{"rendered":"


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Introduction: UK consumer confidence ahead of \u2018painful\u2019 Budget<\/h2>\n<\/header>\n

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/strong><\/p>\n

Fears of a \u2018painful budget\u2019 next month have knocked morale among UK consumers \u2013 a bad sign for the economy.<\/p>\n

The latest poll of UK consumer confidence has fallen sharply this month, with optimism over people\u2019s personal finances, their purchase intentions, and the state of the economy all sharply lower than in August.<\/p>\n

The index, published by data provider GfK<\/strong>, has dropped to -20 this month, down from -13 in August.<\/p>\n

That is the lowest reading since March, when the index was -21,<\/p>\n

Consumer confidence had<\/strong> been improving as the economy grew robustly in the first half of this year and inflation dropped.<\/p>\n

But September\u2019s large drop has almost wiped out the recovery in confidence seen since this spring.<\/p>\n

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<\/svg><\/span> Photograph: GfK<\/figcaption><\/figure>\n

The drop follows repeated warnings that next month\u2019s budget will include tax rises to fix the public finances, following the unpopular decision to means-test the winter fuel payments for pensioners.<\/p>\n

Neil Bellamy, <\/strong>consumer insights director at GfK, <\/strong>says the forward-looking indicators which feed into the index have dropped notably:<\/p>\n

Bellamy <\/strong>explains:<\/p>\n

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<\/svg>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 ten points).<\/p>\n

These three measures are key forward-looking indicators so, despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK\u2019s new government.<\/p>\n<\/blockquote>\n

Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers\u2019 willingness to spend, Bellamy<\/strong> adds.<\/p>\n

Earlier this week, DIY company Kingfisher <\/strong>reported weak demand for kitchens and bathrooms, as people resisted buying \u2018big ticket\u2019 items.<\/p>\n

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Bellamy<\/strong> adds that consumers are \u201cnervously\u201d awaiting Rachel Reeves\u2019s budget statement on 30 October, saying:<\/p>\n

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<\/svg>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.\u201d<\/p>\n<\/blockquote>\n

GfK polled just over 2,000 people, between 30 August and 13 September.<\/p>\n

A few days before the survey began, Keir Starmer warned in a setpiece speech that the budget is \u201cgoing to be painful\u201d, and that \u201cthings are worse than we ever imagined\u201d, after the government discovered what it calls a \u00a322bn \u201cblack hole\u201d in the public finances.<\/p>\n

On the final day of its survey, Starmer hammered the point home, warned that painful decisions such as cutting winter fuel payment were necessary to fix the UK.<\/p>\n

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That message appears to have got through to consumers, even though Labour have also pledged not to raise the taxes on working people<\/a>.<\/p>\n

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<\/svg><\/span> Photograph: GfK<\/figcaption><\/figure>\n

The agenda<\/h2>\n