- GfK’s monthly consumer confidence index gave a reading of -22 for January
- Neil Bellamy, GfK: ‘Consumers don’t think things are changing for the better’
Consumer confidence has plunged to its weakest level for over a year, as Britons bolster their finances against signs of economic fragility.
GfK’s latest monthly consumer confidence index gave a reading of -22 for January, compared to -17 in December and four points below the -18 predicted by a Reuters poll of economists.
It was the index’s lowest figure since December 2023 and the biggest drop between December and January since 2011.
All five of the survey’s different measures declined, with people’s expectations for the general economic situation over the next 12 months recording the largest drop of any, falling eight points to -34.
Neil Bellamy, consumer insights director at NIQ GfK, said: ‘New Year is traditionally a time for change, but looking at these figures, consumers don’t think things are changing for the better.’
In addition, GfK’s savings index – which is not part of its overall consumer confidence index – soared by nine points to +30, indicating a far greater reticence among Britons to spend in shops.
Not optimistic: ‘New Year is traditionally a time for change, but looking at these figures, consumers don’t think things are changing for the better,’ said GfK’s Neil Bellamy
Bellamy said the rise was ‘unwelcome because it’s another sign that people see dark days ahead and are therefore thinking of putting money aside for safety’.
GfK’s figures continue a flurry of pessimistic economic news following Chancellor Rachel Reeves’s tax-hiking Budget at the end of October.
From April, employers’ National Insurance Contributions will increase from the current 13.8 per cent rate on annual salaries exceeding £9,100 to a 15 per cent levy on wages above £5,000.
At the same time, the National Living Wage will go up by 6.7 per cent to £12.21 per hour, while retailers will have their business rates relief reduced from 75 per cent to 40 per cent up to a cap of £110,000 per firm.
Many companies have responded to the upcoming changes by either slashing jobs or scaling back their hiring intentions.
Sainsbury’s announced on Thursday that it would make 3,000 employees redundant, including a fifth of its senior management and those working at its cafés, patisserie and pizza counters.
Fellow grocery giant Morrisons also said it would axe over 200 posts a month after its chief executive, Remi Baitiéh, urged the UK Government to stagger the ‘avalanche of costs’ set to impact businesses following the Budget.
Both firms were among over 80 signatories to a letter written by the British Retail Consortium in November warning that job losses and price rises were ‘inevitable’ because of Budget tax increases.
Figures released earlier this week by the Office for National Statistics estimated that the number of payrolled staff across the UK in December shrank by 47,000 from the previous month.
That was up on the 32,000 drop recorded in November and the biggest decrease for about four years.
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