Fall in consumer confidence driven by pensioners’ pessimism about their financial future, Which? finds
The recent fall in consumer confidence has been largely driven by pensioners’ pessimism about their future finances ahead of the government’s Budget later this month, Which?’s latest consumer insight tracker has found.
Consumer confidence in the future UK economy, and in their future household financial situation, has fallen for the second month in a row. In the last month, net confidence in the future UK economy has fallen nine percentage points to -34. This means one in six (17%) consumers believe that the UK economy will get better over the next 12 months and half (51%) believe it will get worse. This is the lowest level of consumer confidence in the UK economy since December 2023.
Consumers’ confidence in their future household finances has also fallen nine percentage points to -15. This is the lowest level of consumer confidence in future household finances since July 2023. T
he most commonly cited factors for those thinking the economy will worsen were changes in prices (67%), government tax changes (64%) and the recent change in government (60%) - with the last reasons clearly alluding to anticipated spending and tax changes in the upcoming autumn Budget. Despite falling interest rates, concerns about prices are still high - showing just how long it takes for the benefits of lower inflation to feed through to consumers’ pockets.
Which?’s consumer insight tracker found that pensioners’ pessimism about their financial future was one of the driving factors behind the overall fall in consumer confidence.
Pensioners' confidence in the UK economy fell by 21 points to -59 over the month to 13 September. This decline is much larger than the 13 point fall seen amongst working-age non-parents, and contrasts to the two point increase in confidence seen by working-age parents.
Pensioners’ confidence in their future household finances also fell this month. This group’s confidence score decreased by 19 points to -45, the lowest it has been since December 2022, at the peak of the cost of living crisis and shortly after the 2022 Budget.
These scores reflect a dramatic reduction in confidence amongst pensioners, with some respondents citing the government’s recently announced plans to bring in eligibility criteria for winter fuel payments as one of the reasons for their negative outlook.
While pensioner’s feelings about their future finances have plummeted, as a group overall they remain more positive about their current finances than those of working age.
Which?’s consumer insight tracker also found that missed payment rates has remained at similar levels to previous months with 1.9 million households missing essential payments such as housing, utility, credit card or loan payments in the month to 13 September.
The most common types of missed payments were bill payments (4.7% of UK adults), rent (3.4%) and loan or credit card payments (3%).
14.4 million households (51%) reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month.
Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. The adjustments consumers are most likely to do are cutting back on essentials (26%) and dipping into savings (26%).
Although missed payment and financial adjustment rates have fallen over the last two years, they are still significantly higher than they were before the cost of living crisis began.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research shows a clear fall in consumer confidence - with pensioners’ confidence in their future household finances and the economy at the lowest levels seen since 2022.
“While missed payment and financial adjustment rates have fallen from the peaks reached in the midst of the cost of living crisis, they remain high - highlighting the challenge the government faces in their upcoming Budget.
“If consumers are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.”
-ENDS-
Notes to Editors
Which? advice if you’re struggling to pay your bills
If households are struggling to afford their mortgage, they should speak to their lender as soon as possible. Lenders should be understanding if income levels have changed – for example, because someone has lost their job – and may offer a payment holiday, extending the term to lower the monthly payment or a temporary switch to interest-only repayments. Renters should speak to their landlords about their situation and ask if they are able to offer temporary help.
Consumer Insight Tracker
The Consumer Insight Tracker is an online poll conducted monthly by Yonder on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.
Which? estimates that between 5.7 per cent and 7.9 per cent of households missed or defaulted on a housing, bill or credit payment in the last month to 13th September, with an average estimate of 6.8 per cent. Based on the survey and the ONS estimate for the number of households in 2023 of 28.4 million, this scales up to between 1.6 million and 2.2 million households missing a bill payment in the last month, with an average estimate of 1.9 million.
This survey indicates that between 49 per cent and 53 per cent of households made an adjustment to cover essential spending in the last month to September 13th, with an average estimate of 51 per cent. Based on the survey and the ONS estimate for the number of households in 2023 of 28.4 million, Which? estimates that between 13.8 million and 15.1 million households made an adjustment to cover essential spending in the last month, with an average estimate of 14.4 million.
You can view more consumer insight tracker data and download graphs here.
About Which?
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