Confidence among UK consumers has dropped off a cliff since last summer, as people – particularly women – grow more worried about the state of the economy, and their own finances.
A new survey from the British Retail Consortium and Opinium has found that the public’s expectations for the economy worsened for a fifth month running in February.
Households are also gloomier about their own personal finances, as they anticipate further price rises in the shops – as retailers pass on higher taxes.
February’s drop in confidence continues a decline that started last July, when the Labour party won the general election – and swiftly began warning about "tough choices" and ‘painful decisions’ to fix the country’s finances.
Last October’s budget, with its increase in the national insurance contributions paid by businesses, appears to have also hit confidence.
Helen Dickinson, the chief executive of the BRC, said: “People’s expectations of the economy reached a new low, having fallen almost 40pts since July 2024.
"Even Gen Z (18-27), the most upbeat generation on the economy and their own finances, saw a drop off in optimism. There was also a widening gender divide in confidence this month, with women more pessimistic than men about both the economy and their own finances by 13 and 17pts respectively.
"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."
Lloyds Banking Group, which is something of a bellwether for the UK economy, has missed City expectations by reporting a 20% drop in profits last year.
Lloyds reported a pre-tax profit of £5.97bn for 2024, a fifth lower than the £7.5bn it made in 2023.
Analysts had expected profits of about £6.4bn.
Income was hit by a “lower banking net interest margin”, as interest rate cuts ate into lending margins at the UK’s largest high street lender.
Lloyds reports that its loans and advances to customers rose by £10.2bn to £459.9bn last year, including £6.1bn growth in UK mortgages.
Customer deposits “significantly increased” in the year by £11.3bn, to £482.7bn. Encouragingly, Lloyds has improved its economic outlook, after recent house price growth and after assessing the risks from inflation and interest rates. The agenda • 11am CBI industrial trends report • 1.30pm US initial jobless claims data • 3pm: eurozone consumer confidence report for February We'll be tracking all the main events throughout the day …
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