(Commonwealth_Europe) UK households are increasingly concerned about their financial well-being over the coming year, with many believing it will deteriorate sharply. The latest data reveals that consumer confidence is at its lowest point in the past 15 months, reflecting growing pessimism across the population. The S&P Global UK Consumer Sentiment Index (CSI), which tracks various factors like household financial health, labor market conditions, spending, savings, and debt, recorded a reading of 45.3 in March. This reading represents a slight decrease from the 45.4 recorded in February, continuing the trend where values below 50 signal a decline or worsening in consumer sentiment.
The survey results highlight a significant reduction in disposable incomes, which has contributed to a general downbeat environment surrounding household spending. Although there has been no significant change in the rate of diminished disposable income since the previous month, it remains below the long-term average, indicating that households are still finding it increasingly difficult to manage their finances. As a result, many households are cutting back on their spending.
Interestingly, the survey also reveals a divergence in financial outlooks depending on income levels. Higher-income households, in particular, are experiencing an improvement in their financial situation, a stark contrast to the overall pessimism reflected in the broader population. This division suggests that while wealthier individuals may feel more secure, the majority of households are facing a more challenging financial landscape.
The survey, conducted monthly since 2009 and based on a panel of 1,500 UK households, also found that, despite the negative outlook on disposable incomes, there is an increasing appetite for borrowing. Households are finding it easier to secure credit, thanks to recent rate cuts. This growing inclination to borrow may be considered a response to ongoing financial pressures, with consumers seeking to bridge the gap created by declining disposable incomes.
Maryam Baluch, an economist at S&P Global Market Intelligence, commented that consumer confidence across the UK remained pessimistic in March. She pointed out that the challenges facing the labor market, combined with a general slowdown in the UK economy, were influencing households’ perceptions of their financial health. Baluch also emphasized that the data for March showed a sharp deterioration in households’ outlook for the coming year, with this sentiment being the most negative it has been in the past 15 months.
The survey also highlighted continued concerns about job security, with pessimism about employment prospects persisting for a third consecutive month. The current situation marks a significant shift from the optimism that characterized much of 2024. While there was hope earlier in the year, the ongoing economic challenges seem to have eroded confidence in the stability of jobs, further contributing to the overall negative sentiment surrounding household finances.
In summary, the latest survey results underscore a growing sense of financial insecurity across the UK, driven by declining disposable incomes, concerns about job security, and a general slowdown in economic activity. While wealthier households may be somewhat insulated from these challenges, the broader population faces a difficult financial outlook, and borrowing trends are rising as a response to these pressures.
