UK confidence drops as consumers sour on economic outlook, finances

(Sharecast News) - Consumer confidence in the UK worsened this month, according to a survey from the British Retail Consortium (BRC) on Thursday, with views about the economic situation and personal finances taking a hit. The BRC Consumer Sentiment Monitor for February showed that 50% of people expect the state of the UK economy to worsen over the next three months, up from 48% in January and 42% in December.

With just 13% of consumers expecting better conditions and 32% predicting no change, that nets out to a balance of -37, down from -34 the month before.

This was the fifth straight month of worsening expectations, and a sharp drop since the summer, when more people predicted an improvement in conditions than a deterioration.

"People's expectations of the economy reached a new low, having fallen almost 40 points since July 2024," said the BRC's chief executive Helen Dickinson.

Consumer views of their own financial situation fell to a balance of -11 in February from -4 in January, and while personal retail spending expectations rose to -5 from -9, this may have been driven by expectations of higher prices in the coming months, the BRC said.

"With many businesses warning of the impact that April's employer NIC's increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried," Dickinson said.

Two-thirds of retailers have said that prices will have to rise due to £7bn of additional costs coming their way, which include higher employer national insurance contributions and a new packaging levy, the BRC said.

"With many businesses warning of the impact that April's employer NIC's increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried. And while there was a positive increase in expectations of personal retail spending, this may be largely driven by the expectations of higher prices in the future," Dickinson said.