Financial wellbeing in September 2024
In this article
- Summary
- Consumer confidence in their future household finances and the future UK economy continue to fall
- Drivers of positive and negative outlooks on the UK economy
- Pensioners’ pessimism in the future worsens
- Financial difficulty remains at similar levels to earlier this year
- Summary
- Methodology
Summary
- Consumers, especially pensioners, are feeling much less confident about their future financial situation and the future UK economy after two straight months of significant falls.
- With half of consumers (51%) thinking the UK economy will get worse over the next 12 months, the top reasons for this pessimism were rising prices (67%), tax changes (64%), and the change in government (60%). The last two of those likely relate to the government's warning that the autumn Budget will be "painful" and the commentary surrounding this.
- There have been some improvements in consumers’ financial difficulty with the proportion of households missing a housing, bill, loan or credit card payment reducing to 6.8% and the financial adjustment rate remaining consistent at 51%.
Consumer confidence in their future household finances and the future UK economy continue to fall
Consumers’ 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 9 percentage points to -34. This represents one in six (17%) consumers believing that the UK economy will get better and half (51%) believing it will get worse. This is the lowest level of consumer confidence in the UK economy since December 2023. Additionally, in the last month, net consumer confidence in their future household finances has also fallen 9 percentage points to -15. This is the lowest level of consumer confidence in their future household finances since July 2023.
On the other hand, consumers' confidence in their current financial situation improved slightly this month, with the level increasing 2 percentage points to a score of +22.
Consumers’ confidence in the future UK economy has fallen to -34 this month
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.
Drivers of positive and negative outlooks on the UK economy
Other organisations, such as GfK, have also observed recent falls in consumer confidence, which has led commentators to link these falls to the government's warning that the Budget will be "painful".
Our data provides colour to this picture as we also asked respondents why they think the economy would improve, worsen or stay the same. Amongst those who expect the economy to worsen, the most commonly cited factors were changes in prices (67%), government tax changes (64%) and the recent change in government (60%), where the last two of those reasons clearly allude to anticipated spending and tax changes in the upcoming autumn Budget.
On the other hand, amongst those who believe the economy will improve, the majority cited the recent change in government (56%) as reason for improvement, whilst two in five (38%) cited changes in interest rates.
Reasons why consumers think the UK economy will improve or worsen
Source: Which? Consumer Insight Tracker. Bases: Consumers who think the UK economy will get worse (1,097) Consumers who think the UK economy will get better (332).
Pensioners’ pessimism in the future worsens
Last month we reported that confidence in the future economy was particularly low amongst pensioners. This continued this month with the biggest falls in confidence again being among pensioners. Pensioners' confidence in the future UK economy fell by 21 points to -59 over the past month. This decline is larger than the 13 point fall seen amongst working-age non-parents, and contrasts to the 2 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. In contrast, working age non-parents’ confidence fell by 11 points, and working age parents’ confidence increased by 1 point.
These scores reflect a dramatic change in confidence amongst pensioners compared to May 2024. In addition to the reasons covered above, some pensioners specifically mentioned the government’s recently announced plans to bring in eligibility criteria for winter fuel payments that mean an estimated ten million pensioners will no longer receive the payments.
Pensioners’ confidence in the future UK economy reduced to -59 and their confidence in their future household finances reduced to -45
Data for demographic groups are unweighted and samples vary between waves. Typical sample sizes per wave range from 528-578 for working age parents, 982-1,052 for working age non-parents and 473-539 for pensioners (based on middle quartiles).
Financial difficulty remains at similar levels to earlier this year
Following the surge in the reported missed payment rate in August, this month the proportion of households missing a payment reduced by 2.5 percentage points to 6.8%. This level of missed payments closely aligns with previous months, seen between April and June this year.
Looking closer at the types of missed payments:
- 4.7% missed a household bill payment,
- 3.4% of renters missed a rent payment,
- 2.3% of mortgage holders missed a mortgage payment, and
- 3% missed a loan or credit card payment.
Consumers’ missed payment rate reduced to 6.8%
Source: Approximately 2,000 respondents per wave. UK level data are weighted to represent the adult population of the UK by age, gender, region, social grade, working status and housing tenure.
Half of consumers (51%) made at least one adjustment to cover essential spending in the month to September 13th. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This financial adjustment rate has remained consistent with last month’s level (51%). Much like previous months, the adjustments consumers are most likely to do are cutting back on essentials (26%) and dipping into savings (26%).
Half (51%) of households made at least one adjustment to cover essential spending
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft.
Summary
Back in July we outlined how, upon taking office, Labour faced a formidable challenge; to alleviate financial difficulties and to restore consumer confidence to pre-cost-of-living levels. Almost three months on, however, consumers’ confidence in their future finances and in the future UK economy have declined, with half (51%) of consumers believing the UK economy will get worse. This decline in consumer confidence can partly be attributed to Labour’s negative rhetoric surrounding the upcoming autumn Budget, with 67% citing a change of prices and 64% citing government tax changes as the reasons for their pessimism.
Over the same period, household financial difficulty has remained at similar levels, despite improvements in the adjustment rate earlier this year and previous signs that missed payments may start trending to under 6%.
Taken together, this data shows that Labour’s formidable challenge remains and may have become even harder.
Methodology
The fieldwork was conducted by Yonder on behalf of Which between 13th and 15th of September 2024. A sample of 2,067 UK adults were surveyed online and weighted to be nationally representative.