UK consumer gloom eases slightly but debt levels rise

(Sharecast News) - The downturn in UK consumer confidence eased slightly in February on the back a reduced strain on household finances, though rising debt levels and a willingness to make major purchases continued to weigh heavily on sentiment. The S&P Global UK Consumer Sentiment Index, which was based on a panel of 1,500 households, inched higher to 44.8 this month from 44.6 in January.

This marked its highest in three months but sentiment "remains in the doldrums", with the index firmly below the neutral 50-point level, running at one of the lowest levels seen over the past two years.

The household finance index rose to a four-month high of 43.7, though consumers were slightly more pessimistic regarding theirf inancial prospects for the coming next 12 months.

"A period of prolonged rain and a dearth of sunshine have no doubt not helped to lift the low spirits seen among households, but there's more going on here than just bad weather," said S&P Global Market Intelligence economist Maryam Baluch.

"Households are growing increasingly worried about debt in particular, especially as a rising need for credit was met with the steepest decline in availability of loans since August 2024."

The debt sentiment index dropped to a 23-month low of 48.2 from 49.2 the month before, with the level of debt hitting a seven-month high of 52.1 from 50.8 the month before.

As a result, sentiment around big ticket purchases fell to its lowest in ten months, though a slight easing in the decline of cash available to spend helped the spending sentiment index rise to a three-month high.

Meanwhile, the labour market sentiment index fell to an eight-month low of 52.0 from 52.1 the previous month, due to slower growth in workplace activity. However, sentiment around jobs remains "resilient", S&P said.