Consumer confidence drops to four-month low ahead of Autumn Budget

UK consumer sentiment has weakened in November as households reported greater strain on finances and growing uncertainty ahead of the Autumn Budget, according to the latest S&P Global UK Consumer Sentiment Index.

The index, which tracks financial wellbeing, labour market conditions, spending, savings and debt, fell to 45.2 in November from 47.4 in October. A reading below 50 signals a deterioration. The survey, based on responses from 1,500 households between 6 and 10 November, showed declines across all major indicators.

Households grew more pessimistic about their financial outlook for the coming year. The relevant index slipped below the neutral threshold of 50.0 for the first time since August. Only London, the North West and Wales expect any improvement, with confidence dropping back in all other regions. The North East was the most downbeat, recording the largest fall during the month.

Current financial wellbeing declined at a faster rate. Negative sentiment strengthened for the second consecutive month and was the weakest since July. Higher-income households were still the only group to report any improvement in November, although the increase was smaller than earlier in the year.

Job security stalled after five months of improvement. The seasonally adjusted index printed at 50.0 as workers signalled no further gains. Income from work continued to rise but at the slowest rate since March. Public-sector earnings increased at a solid pace, while private-sector respondents recorded a modest fall that ended a long run of growth. Workplace activity, however, remained robust, marking its thirty-second month of expansion.

Debt levels rose again in November following a brief easing at the start of the quarter. The pace of accumulation was modest but the second fastest since July. Demand for unsecured credit increased for the tenth month in a row, while households reported slightly more difficulty accessing loans.

Meanwhile, cash availability fell at the sharpest rate in five months as inflation and living costs continued to squeeze budgets. Disposable incomes declined across all 12 UK regions and nations for the first time since June. Views on major purchases were the most negative in four months, with all income groups reporting reduced appetite for big-ticket spending.

The net balance of households anticipating higher borrowing costs eased to +17%, down from +24% in October.

Economist Maryam Baluch said: “Consumer confidence has deteriorated across the UK ahead of the upcoming Budget. Households are the most pessimistic in four months in November, signalling intensifying concerns over their current finances and their future financial wellbeing.

“Households’ appetite for spending retreated further amid a steepening fall in disposable incomes, pointing to reduced spending across all income tiers. The need for loans has also grown, while the availability of credit worsened, adding to financial hardships.”

She added: “As we approach the Autumn Budget, a sense of unease permeates across UK households, who are keenly awaiting the chancellor’s forthcoming decisions.”