LONDON (Reuters) – British consumer confidence fell to the lowest level since March as concerns about possible tax hikes dented sentiment in the lead-up to the new government’s first budget next week, a long-running survey showed on Friday.
Market research firm GfK’s consumer confidence survey edged down to -21 in October from -20 in September – the lowest since March when the previous Conservative government delivered its last budget.
Friday’s figure was in line with the median forecast in a Reuters poll of economists.
“As the budget statement looms, consumers are in a despondent mood despite a fall in the headline rate of inflation,” Neil Bellamy, consumer insights director, said.
British households are still struggling with higher living costs that were accelerated by a surge in energy prices following Russia’s invasion of Ukraine in February 2022.
But official figures have shown a sharp drop in inflation and a cooling in wage growth, which investors see as likely to prompt the Bank of England to reduce borrowing costs at its next meeting in November and possibly again in December.
“This month’s Consumer Confidence Barometer paints a picture of people holding their breath to see what’s in store for them on Oct. 30,” Bellamy said.
Prime Minister Keir Starmer and Reeves have warned some taxes will increase in the budget. Starmer has said that those with the broadest shoulders should bare the brunt of tax hikes.
Three of the five components of the GfK’s survey – the longest-running measure of British consumer sentiment – fell this month.
GfK’s measure of how consumers view the economy over the next 12 months declined to -28 from -27 in September while households’ feelings about their personal finances increased by one point to -2.
There was also a four-point increase in a sub-index of shoppers’ willingness to make expensive purchases.
Separate business surveys on Thursday showed a fall in confidence among businesses in October.
(Reporting by Suban Abdulla; Editing by William Schomberg)
