UK consumer confidence hit a new record low this month, amid fresh warnings about the cost pressures faced by businesses and signs that shoppers are cutting back further on spending.
The Consumer Confidence Index from data company GfK fell three points in August to -44 – the lowest since records began in 1974.
Joe Staton, CGfK client strategy director, said: “All measures fell, reflecting acute concerns as the cost-of-living soars. A sense of exasperation about the UK’s economy is the biggest driver of these findings.
“These findings point to a sense of capitulation, of financial events moving far beyond the control of ordinary people.
“With headline after headline revealing record inflation eroding household buying power, 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.”
“These findings point to a sense of capitulation, of financial events moving far beyond the control of ordinary people…” https://t.co/CIqJ4GDgcw@GfK#growthfromknowledge
— Joe Staton (@JoeStatonGfK) August 19, 2022
Meanwhile, the latest quarterly Federation of Small Business (FSB) Small Business Index found most small firms expect no or negative growth in the next year – and small business confidence is at its lowest on record outside of lockdowns.
It said cost pressures and labour shortages are “stymying” investment plans and “hampering” economic development.
The results differed by sector, with a better outlook for businesses in the information and communication sector, where 63% of businesses expected to grow in the next year, compared with only 34% of wholesale and retail firms, and 35% of hospitality sector businesses.
Martin McTague, FSB’s national chair, said: “The fall in GDP in the second quarter and the record-high inflation figures show the scale of what small businesses are up against, with our second quarter Small Business Index uncovering warning signs in many different indicators, from overall confidence to staff numbers and growth aspirations.
“Inflation is higher than at any point for the last four decades, and is also acting as an inhibitor to investment. It’s a toxic recipe for the future health of the economy.”
Elsewhere, figures from the Office for National Statistics show that retail sales volumes rose by 0.3% in July 2022 following a fall of 0.2% in June 2022.
Looking more broadly, in the three months to July 2022, sales volumes fell by 1.2% when compared with the previous three months; this continues the downward trend since summer 2021.
Darren Morgan, ONS director of economic statistics, said: “Clothing and household goods sales declined again, with feedback continuing to indicate consumers are cutting back due to increased prices and concerns around affordability and cost of living.”
The latest Public opinions and social trends findings from the ONS, covering August 3-14, found that 89% of adults reported their cost of living had risen over the past month.
About three-quarters (76%) of adults reported being very or somewhat worried about rising costs of living in the past two weeks.
Furthermore, about one in five (22%) adults travelled abroad in the last eight weeks; among those, a third (34%) of adults reported that they experienced some form of disruption while travelling abroad in the past eight weeks.
The gloomy economic findings echo those reported by the Lloyds Bank UK Sector Tracker, which showed how consumers are cutting back on discretionary spending.
It showed that transport and tourism and leisure recorded the fastest falls in activity of any UK sectors in July.
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