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Consumer confidence skipped higher in November in the wake of a budget that left businesses reeling but seemingly made Brits feel better off.
The GfK consumer confidence index — a measure of how people view their personal finances and broader economic prospects — rose three points to -18 after two consecutive months of decline.
Businesses have warned that big tax rises in the budget will lead to job losses and pay cuts but that appears to be having little effect on Brits’ mood.
All five components of the GfK’s survey rose this month, led by a gauge of shoppers’ willingness to make expensive purchases which rose five point to -16.
“There was evidence of nervousness in recent months as consumers contemplated the potentially worrying impact of the UK Budget at home, and even the implications of the US presidential election. But we have moved past those events now,” said Neil Bellamy, GFK’s consumer insights director.
However, Bellamy cautioned that while the New Year typically brings its own dose of optimism, it is too early to expect more significant improvements to the consumer mood.
“Inflation has yet to be tamed, people are still feeling acute cost-of-living pressures, and it will take time for the UK’s new government to deliver on its promise of change,” he said.
The Bank of England governor Andrew Bailey told the Treasury committee on Tuesday that while it is unclear how businesses will handle the rise in national insurance, he expects it will likely involve higher prices, lower wages and some job cuts.
Dozens of UK retailers including Tesco, Sainsbury’s, and Marks and Spencer wrote to Rachel Reeves this week to warn the annual costs facing the sector will amount to £7bn and will lead to job losses and higher prices for customers.
Bailey told MPs this was a reasonable assessment. “I think there is a risk here that the reduction in employment could be more. Yes, I think that’s a risk.”
The departing head of John Lewis added his voice to the chorus on Thursday calling the changes to national insurance and a lack business rates reform a “two-handed grab”, in an interview with the Financial Times.
Morning update
The Competition and Markets Authority will allow more deals to go ahead after Keir Starmer argued the agency was holding back Britain’s growth.
It will focus only on the “truly problematic mergers” to help deliver a regime “that leaves no one in any doubt that the UK is open to business,” said CEO Sarah Cardell in a speech on Thursday.
Historically, the CMA has often required a company to offload assets before a deal is approved.
Starmer told business leaders last month that he wants to “make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does”.
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