High inflation is eroding UK consumer confidence: survey
The bigger backdrop to Britain’s struggling economy is two decades of stagnating living standards, according to a report
[LONDON] A majority of Britons expect the economy will get worse this year amid a resurgence in inflation, according to a survey that heaps fresh pressure on Chancellor of the Exchequer Rachel Reeves ahead of her autumn budget.
The British Retail Consortium (BRC) said that 52 per cent predict a deterioration in the next three months, while just 16 per cent expect things to get better. The net balance of minus 36 was the lowest since May. Consumers also remained pessimistic about their personal finances and plan to rein in spending.
“Inflation is now one of the biggest concerns among the public, with food inflation expected to rise to 6 per cent by the end of the year,” said Helen Dickinson, chief executive of the BRC. “Worries about the budget, combined with the increase in the cost of living, have eroded confidence, with little sign that inflation will come down soon.”
The findings add to the challenge facing Reeves to get the economy moving, as consumers contribute around 60 per cent of total spending. The chancellor has been blamed for stoking inflation by raising taxes on businesses in her first budget, and more are expected in her second on Nov 26 as she is forced to plug a new hole in the public finances.
Inflation is at its highest level since the start of 2024 and pay growth is slowing, official figures this week showed. Consumers can expect little help from Bank of England (BOE) policymakers, who are predicted to refrain from cutting interest rates further at their decision today and for much of the coming year.
Reeves told Cabinet colleagues last week that the government must help the BOE in its battle to reduce inflation by controlling public spending and driving economic growth.
The proportion of those predicting that the economy will deteriorate over the next three months was the highest since April, when big increases to employer payroll taxes and the minimum wage came into effect, the BRC said.
The bigger backdrop to Britain’s struggling economy is two decades of stagnating living standards, according to a separate Resolution Foundation report that showed household incomes have grown just 7 per cent since 2005. If incomes had continued their pre-2005 trend, a typical British family would be £20,000 (S$34,836) a year better off today.
“As we look ahead, the task of raising living standards across Britain is bigger than ever, we simply cannot afford any more stagnation,” said Ruth Curtice, chief executive of the think tank. BLOOMBERG
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