U.K. Consumer Confidence Sinks to Lowest Since 2008 Recession

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U.K. consumer confidence plunged to the lowest since the 2008 recession, with the outlook for their personal finances and the general economy worst than during the depths of the financial crisis.

GfK’s monthly reading dropped seven points to minus 38 in April, well below the reading of minus 33 anticipated by economists. It indicated an increasing sense of caution because of a cost-of-living crisis, slowing growth and the risk of worse to come.

The figures add to evidence that the pace of Britain’s economic recovery is sputtering because of a surge in energy prices and inflation, which have delivered the biggest squeeze on household spending power on record.

“There’s clear evidence that Brits are thinking twice about shopping,” said Joe Staton, client strategy director at GfK. “With little prospect of any economic relief on the horizon, we can only forecast further falls in the index.”

The opposition Labour Party pointed to the data as a reason for Prime Minister Boris Johnson’s Conservative government to do more to protect consumers from surging prices. Chancellor of the Exchequer Rishi Sunak has been under fire for channeling aid mainly to those in employment, skipping relief for pensioners, students and people living on benefits.

“How many warnings like this does the chancellor need to grasp the seriousness of the cost of living crisis?” asked Labour lawmaker Abena Oppong-Asare, who speaks on Treasury matters for the opposition. “Collapsing consumer confidence shows how the cost of living crisis is weighing down growth.”

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A separate KPMG survey found that a third of consumers were already buying less in 2022, with clothing the most commonly cut item, followed by eating out. Respondents expected to spend an average of 82 pounds ($107) a month more on bills and taxes. Rising costs were four times greater a deterrent to spending their savings than pandemic uncertainty, the poll of 3,000 consumers found

Together, the data may shed light on retail sales, with official figures for March due out at 7 a.m. London time. Economists anticipate a drop of 0.3% for a second consecutive month.

Britons’ outlook for their personal finances over the next 12 months dropped 6 points to minus 19, 16 points worse than April 2021. Expectations for the general economic situation over the next year fell 6 points to minus 55. That’s 44 points lower than in April 2021.

GfK’s measure is one of the things Bank of England policy makers are considering as they assess how quickly to tighten interest rates. They’ve been concerned that falling confidence may indicate a slowdown in growth in the months ahead. They’re also eager to push inflation back down toward their 2% target.

Read more: BOE’s Mann Considering Case for Bigger U.K. Rate Rise Next Month

The war in Ukraine is driving up the cost of food and fuel and swallowing increases in pay. The government has added to that by imposing a swinging tax increase in April at the same time higher utility bills took effect.

GfK surveyed 2,000 people from March 1 to March 14.

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