UK consumer confidence drops to new low in February

UK consumer confidence slipped to a new low of -37 in February, amid the worsening state of the economy. According to the latest BRC-Opinium Consumer Sentiment Monitor, the economy worsened for the fifth consecutive month, down from -34 in January. The BRC reported that even Gen Z, despite being the most “upbeat” generation saw a drop in optimism, while the gender divide also widened in February with women more pessimistic than men about both the economy and their own finances by 13 and 17pts respectively. The personal financial situation index dropped to -11 in February, down from -4 in January. However, personal spending on retail rose to -5 in February, up from -9 in January while personal spending overall remained at +4 and personal saving remained at -3. Helen Dickinson, chief executive of the British Retail Consortium, said: “People’s expectations of the economy reached a new low, having fallen almost 40pts since July 2024. With many businesses warning of the impact that April’s employer NIC’s increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried. And while there was a positive increase in expectations of personal retail spending, this may be largely driven by the expectations of higher prices in the future. “Expectations of higher prices are not unfounded, with two-thirds of retailers saying prices will have to rise as a result of the £7bn in additional costs, including higher employer NICs and a new packaging levy. Almost half of retailers also warned of hiring freezes, with entry-level jobs often among the first to go as they seek any cost efficiencies to help them protect customers from the worst of the rising costs.” Dickinson continued: “As the Government bill on the future of business rates progresses through Parliament, it is essential that no shop ends up paying more in rates as a result of these reforms, otherwise retailers will face a triple whammy of budget costs, business rates rises, and new packaging and recycling levies, all of which will filter through to consumer prices.”