LONDON: Confidence among British consumers remained close to the lowest level on record this month with households facing double-digit inflation, rising interest rates and political chaos, survey showed today (Oct 21).
Market research firm GfK'’s consumer confidence index rose to -47 from -49 in September which was its weakest level since the survey was launched in 1974. Economists polled by Reuters had expected a worse reading of -52.
The survey of 2,001 people was conducted between Oct 3 and Oct.13, covering the period after Prime Minister Liz Truss agreed to a first of several U-turns on tax policy – reversing her decision to axe the top rate of income tax – but before her resignation on Thursday (Oct 20).
New finance minister Jeremy Hunt has said he will drop most of Truss’ economic programme, cut public spending and has warned of further difficult decisions on tax as he tries to restore Britain’s economic policymaking credibility.
“Households are not just running scared of burgeoning energy and food prices, and the prospect of further base rate rises increasing mortgage costs. They are now facing the likelihood of tax rises and even austerity measures,” Joe Staton, client strategy director at GfK, said.
A three-point fall in a measure of consumers’ willingness to make expensive purchases showed how their caution could slow the British economy which already looks set to go into a recession.
“Consumers, like governments, are just as capable of U-turns, and today’s economic headwinds indicate a long hard winter,” Staton said.
Separately, a watchdog said nearly 32 million people, or 60% of all UK adults, are finding it a heavy burden or somewhat of a burden to pay their bills as a cost of living crisis bites.
The Financial Conduct Authority's (FCA) latest Financial Lives survey said the total was up six million from 2020, when the economy went into lockdown to fight the Covid-19 pandemic.
Britons are facing rising food and fuel prices, with inflation now topping 10%, far higher than most pay increases.
The survey said there were 4.2 million people missing domestic bills or credit repayments in three or more of the last six months, up from 3.8 million in 2020.
“One in four UK adults are in financial difficulty or could quickly find themselves in difficulty if they suffered a financial shock,” the watchdog said in a statement.
The watchdog said it has already begun reminding banks about how to support customers in financial difficulty, who should contact providers in the first instance to discuss options.
The FCA said its survey is the largest of its kind, with more than 19,000 people interviewed between February and June this year. – Reuters
Source: The Sun Daily
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