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Confidence in the UK economy has plummeted as consumers worry about “dark days” ahead, according to a closely watched survey out this morning.
GfK’s long-running consumer confidence index registered a steep five-point fall to –22 in January, the lowest score for a year.
All five measures tracked by the market research firm were down this month as consumers fretted about the impact of last year’s Labour budget on the country’s economic health.
There are particularly big falls in consumer views on the wider UK economy, both looking back a year (down seven points) and at what’s in store for the next 12 months (eight points lower).
Neil Bellamy, consumer insights director at NIQ GfK, said these figures underlined that consumers were losing confidence in the UK’s economic prospects.
The major purchase index is also down four points to –20, while the savings index on motivation to save money has leapt nine points in January to +30.
This sharp increase was unwelcome because it is another sign people see “dark days ahead and are therefore thinking of putting money aside for safety”, Bellamy added.
“New year is traditionally a time for change, but looking at these figures, consumers don’t think things are changing for the better,” he said.
Morning update
There was a “worrying surge” in the number of UK businesses entering ‘critical’ financial distress in the final quarter of 2024, according to the latest Red Flag Alert report from Begbies Traynor.
‘Critical’ financial distress rose by 50.2% to 46,853 companies over the three months, underscoring a deteriorating outlook, the insolvency advisory firm said.
Of the 22 sectors covered by Red Flag Alert, 21 saw a noticeable increase quarter on quarter in the number of businesses in ‘critical’ financial distress. The growth in distress was particularly concerning in consumer-facing sectors, with general retailers and food & drug retailers increasing significantly.
Begbies executive chairman Ric Traynor said he feared 2025 could end up being “a watershed moment” where thousands of UK businesses call time after struggling to survive for years.
Begbies partner Julie Palmer added: “After a disappointing Christmas, consumer-facing industries, in particular, are feeling the strain, with rising operational costs and higher wages adding to an already difficult situation. With many such businesses already operating on thin margins, I fear the current situation will undoubtedly push some over the edge.
“Indeed, at a time when consumer confidence is so volatile and borrowing costs look likely to be structurally higher for the foreseeable future, the situation feels very precarious. Sadly, this has only been exacerbated by the tax rises and increase in national minimum wage levied on businesses during the October 2024 UK budget which means the financial strain on businesses will only increase later this year.”
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