UK consumers save more as they brace for tougher times, GfK says

[LONDON] British consumers remained in a cautious mood this month ahead of possible tax increases later this year and added to their savings, according to a survey published on Friday.

The consumer confidence index from market research firm GfK dipped to -19 in July from a six-month high of -18 in June.

Economists polled by Reuters had mostly expected a reading of -20.

“The data suggests that some people may be sensing stormy conditions ahead,” Neil Bellamy, consumer insights director at GfK, said.

“With speculation growing over possible tax rises in the Autumn budget, and price pressure contributing not just to higher inflation already but also to the likelihood of worse inflation to come, the news is worrying.”

Finance minister Rachel Reeves is expected to raise taxes for a second year in a row in her next annual budget plan after Prime Minister Keir Starmer was forced into u-turns on plans to save billions of pounds on welfare spending.

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GfK’s savings index, which is not part of its headline confidence gauge, jumped seven points to +34, its highest level since November 2007, shortly before the global financial crisis deepened.

Official retail sales data for June, due at 0600 GMT, are expected to show a rise in sales volumes after a sharp fall in May, according to the economists polled by Reuters. REUTERS