Consumer confidence drops to lowest level in two years

Many consumers tightened their belts in the final quarter of 2025, as confidence fell by one percentage point to its lowest level in two years, research shows.

 

The Q4 Deloitte Consumer Tracker found that consumer confidence fell by 1.1 percentage points during the final quarter of 2025, from -10% in Q3 2025 to -11.1%.

 

The fall in confidence, based on responses from 3,200 UK adults, was driven by a drop in five of the six measures included in the index.

 

Perceptions of levels of debt fell 2.6 percentage points; household disposable income was down 1.4 percentage points, as was general health and wellbeing.

 

Sentiment around job security dipped 0.6 percentage points while career progression fell 0.9% percentage points.

 

However, there was a sign of optimism, with sentiment around the UK economy improving eight percentage points, up to -56% in Q4 from -64% in Q3.

 

However, this was 4.4 percentage points down year-on-year.

 

More: UK consumer confidence improves as economic prospects darken

 

Céline Fenech, consumer insight lead at Deloitte UK, said: “While it is encouraging to see consumers’ views of the UK economy improving, likely boosted by the easing of interest rates and inflation, a broader improvement in confidence will require a more significant change in perceptions of affordability and job prospects.

 

“For now, consumers remain cautious about the economic outlook and, until they can be persuaded otherwise, will continue to hold off parting with their savings and hard-earned cash.”

 

Ian Stewart, chief economist at Deloitte UK, added: “Sentiment about economic prospects has increased markedly, with levels of uncertainty around taxes and public spending falling in the wake of November’s Budget.

 

“Inflation remains uncomfortably high but is likely to ease over coming months, paving the way for further, modest rate cuts. A lower inflation and interest rate environment should, in turn, help bolster consumer spirits.”

 

Both essential and discretionary spending fell year-on-year by 7.6 and 5.1 percentage points respectively.

 

“Despite capturing the festive shopping season, net spending was down across most essential and discretionary categories in Q4,” said Deloitte.

 

Almost a third of people (30%) said that they had less money to spend, while more than a quarter (27%) changed their usual spending habits and opted for different stores and brands to keep costs down.

 

A quarter of consumers (25%) said that, despite the festive season, they only spent on essentials in Q4, with two fifths (39%) saying that they have been more frugal and careful with their spending.

 

Oliver Vernon-Harcourt, head of retail at Deloitte UK, said: “Despite the festive period, consumers have demonstrated a real focus on value and greater frugality.

 

“An uptick in consumer confidence will depend on people feeling more encouraged to loosen their purse strings, so we can expect to see more retailers and restaurants using discounts and deals to entice spending in 2026.”