UK consumer confidence falls at fastest rate since Brexit vote as cost of living bites

UK consumer confidence falls at fastest rate since Brexit vote as cost of living bites Economic fallout from war in Middle East adds to pressures on consumers and on chancellor before budget

Consumer confidence in the UK has fallen at the fastest rate outside the Covid pandemic since the 2016 Brexit vote as the escalating economic damage from the war in the Middle East hits Britain.

With less than a week before John Healey’s first budget, the latest barometer from the data company GfK indicated confidence plunged by 11 percentage points in October to -24 amid pressure on consumers from the rising cost of living.

Highlighting the challenge for Andy Burnham and his chancellor before the statement on Wednesday, GfK said its consumer confidence index last fell by this much in a single month in July 2016, following the shock leave result in the EU referendum.

The index – which has been closely tracked by the government and the Bank of England for early warning signs from the economy since the early 1970s – recorded its largest ever fall, of 25 points, in March 2020 just after the start of the first UK lockdown.

The latest snapshot represents a marked change from the summer, when GfK said a “ Burnham bounce ”, along with a strong World Cup run by the men’s England football team and sunny weather, lifted the mood of consumers in its long-running monthly survey.

Neil Bellamy, consumer insights director at GfK, said: “Relentless cost-of-living pressures, against an international backdrop of unresolved regional conflicts that are themselves contributing to domestic inflation now at 3.5%, appear to have swept aside the nascent optimism we saw following the appointment of a new UK prime minister this summer.”

It comes as consumers face a fresh squeeze on living standards triggered by the unfolding war in the Middle East. Petrol and diesel prices have surged close to record highs and energy bills have increased in advance of a difficult winter for households already feeling the pinch from years of price increases.

Over the past five years analysis by the Trades Union Congress shows that UK households have paid almost £14,000 on average in additional costs for mortgages, loans, energy and water bills.

With less than a week before his tax and spending speech to the Commons, the chancellor is under pressure to take action to support households amid warnings that consumer energy bills could reach £2,000 a year from January for the typical household.

Healey has pledged to use his statement to announce “breathing space” measures to ease the pressure. However, he has also warned that the government has limited resources to intervene as the Middle East conflict pushes the UK’s borrowing costs to the highest level in decades.