UK consumer confidence slumps to lowest point in more than three years

UK consumer confidence has slumped to its lowest point in more than three years, a closely watched survey published on Monday showed, as households braced for higher interest rates and spending became increasingly constrained (Alliance News).

The S&P Global consumer sentiment index fell for a third straight month to 41.3 in October, down from 42.7 in September — the lowest reading since July 2023 and well below the neutral 50-point mark. The survey, collected monthly since 2009, is based on a panel of 1,500 UK households.

More than half of households — 57% — now expect interest rates to rise, while the sub-index for household finances slumped to a 40-month low of 36.7. Spending intentions weakened, the savings index dipped to 39.6, and the survey recorded a fifth consecutive month of pessimism towards the labour market (Sharecast).

Maryam Baluch, economist at S&P Global Market Intelligence, said the slump underscored the tough environment facing the government ahead of the fiscal event.

“The slump in household confidence to its gloomiest in more than three years, a time when inflation was still close to multi decade highs, underscores the tough environment the government faces with the upcoming Budget,” she said (AJ Bell).

The reading lands a week before Chancellor John Healey delivers his first Budget under Andy Burnham’s government, with inflation at 3.1% and consensus expecting a rise to 3.4% when the Office for National Statistics publishes figures this week. The Bank of England’s Monetary Policy Committee has made clear it will hike Bank Rate if inflationary pressures continue to mount (Sharecast).