Consumer confidence falls sharply as households ‘nervously’ await Budget

Consumer confidence has fallen sharply in “not encouraging news” for the UK Government as households “nervously” await next month’s autumn Budget, according to a long-running survey.

GfK’s Consumer Confidence Index fell seven points in September to minus 20, with significant drops in predictions for personal finances and the general economy over the coming year.

Expectations for the general economy over the next 12 months fell by 12 points to minus 27, while the forecast for personal finances is down nine points to minus three.

The major purchase index, an indicator of confidence in buying big ticket items, is down 10 points on last month to minus 23, five points higher than a year ago.

GfK said: “These three measures are key forward-looking indicators so despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new Government.”

Neil Bellamy, consumer insights director at GfK, said: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.

“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the Budget decisions on October 30.”