UK consumer confidence falls amid fear of job losses: survey

[LONDON] UK consumer confidence declined for the first time in three months as rising unemployment and stretched household budgets loomed over the economic outlook.

GfK said on Friday (Feb 27) that its sentiment gauge fell three percentage points to minus 19 in February, with Britons less willing to splash out on big-ticket items amid growing pessimism about their personal financial prospects.

The survey suggests caution is once again gripping British consumers, whose spending contributes around 60 per cent of economic output. GfK’s headline confidence barometer has erased all the gains made since November, when Chancellor of the Exchequer Rachel Reeves’ decision to refrain from raising broad-based taxes lifted the public mood.

Relief is now giving way to renewed unease, with unemployment at a five-year high and forecast to climb further. Neil Bellamy, consumer insights director at GfK, warned that “this is increasing concerns about job security, particularly given the backdrop of weak wage growth”.

Bank of England (BOE) policymakers are closely watching the consumer picture as they debate when, and whether, to cut interest rates again. Catherine Mann, one of the BOE’s most hawkish voices, recently said she’s examining whether it’s the fear of job losses, rather than price pressures, that is keeping households reluctant to spend.

Fewer households on balance thought now is the right time to make major purchases, while an index tracking their personal financial outlook fell the most in almost a year, GfK said. Far more expected the economy as a whole to get worse than improve over the next year.

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Unemployment worries are rising rapidly among young people in particular, GfK’s data showed, as the youngest workers are bearing the brunt of the UK’s jobs crisis. The number of 16 to 24-year-olds left out of work and education climbed to almost one million at the end of last year, data on Thursday showed.

“With fewer entry-level opportunities available, those on lower incomes are already feeling the strain, and this trend risks undermining the typically more optimistic outlook held by younger age groups,” Bellamy said. BLOOMBERG