“Exasperation” with the plight of the UK economy has eroded consumer confidence to the lowest level ever, reveals a closely watched survey published today.
Households are being downtrodden by a string of bleak economic news, uncertainty over how they will cope with sky-high energy bills during the winter months and sharp fall in spending power.
Those headwinds drove GfK’s consumer confidence survey to minus 44 in August, the lowest reading the firm has recorded since it started tracking the data in the 1970s.
Bank of England’s UK GDP projections
The survey was already running at minus 41 in July, also a record low.
“A sense of exasperation about the UK’s economy is the biggest driver of these findings,” Joe Staton, client strategy director at GfK, said.
Britain is expected to tip into a 15-month long recession in the final months of this year, caused by consumers cutting spending in response to inflation eroding living standards.
Energy bills are forecast to jump 80 per cent in October to over £3,500 annually, while inflation is set to top 13 per cent in the same month, up from an already 40-year high of 10.1 per cent.
The Bank of England has been forced to hike interest rates six times in a row to tame price rises, including an unprecedented 50 basis rise earlier this month, taking them to 1.75 per cent.
That policy tightening has tightened the screws on homeowners and made it tougher for first time buyers to get on the property ladder.
Anxiety among households is being stoked by further government support to offset the cost of living crunch being delayed until a winner out of Liz Truss and Rishi Sunak emerges from the Tory leadership race.
Annual UK CPI inflation
“The strain on the personal finances of many in the UK is alarming. Just making ends meet has become a nightmare and the crisis of confidence will only worsen with the darkening days of autumn and the colder months of winter,” Staton added.