Consumer confidence at its lowest since 2020
The news comes ahead of the Spring Statement tomorrow and shows how confidence in the economy and future household finances is tumbling as the cost of living continues to rise, and conflict in Ukraine creates additional economic uncertainty.
According to Which?’s Consumer Insight Tracker, just one in 10 (10%) UK consumers think the economy will improve over the next 12 months, and three quarters (74%) think things will get worse. This results in a net confidence score in the economy of minus 64. This compares to minus 19 just last month and is the lowest since October 2020.
Confidence in future household finances also dropped significantly, with consumers clearly anticipating that the state of the economy will affect their own finances. This measure dropped to minus 40 compared to minus 21 in February, the lowest figure since the first national lockdown was announced in March 2020.
Which?’s Consumer Insight Tracker also shows that financial difficulty has increased among households. More than half (54%) of consumers said their household has had to make an adjustment, such as cutting back on essentials or dipping into savings, to cover essential spending in the past month.
Worryingly, an estimated 2.1 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in the past month. Rent and bills were the most common types of missed payment, with 6% of renters missing their rent payment and 5% of all consumers saying their household had missed a bill payment.
The most common types of missed bill were energy bills (2.5%), phone bills (2.6%) and water bills (2.3%). Six in 10 (61%) of those who reported missing a bill payment said they had missed more than one – highlighting the extreme pressure that some households are under during the cost of living crisis.
Which? says its research clearly shows the most financially vulnerable are facing difficult financial decisions just to stay afloat.
Inflation and price hikes are only expected to continue rising in 2022 – meaning even more people could be plunged into financial insecurity.
Adam French, Which? consumer rights expert, said: “Our research shows how a relentless cost of living crisis is putting huge pressure on household finances – with confidence in the economy at its lowest level since 2020. This is particularly worrying as price hikes and inflation are only predicted to rise further in 2022 – even after the April increases take effect.
“Ahead of the Spring Statement, the government and businesses must urgently take action to support those who could quickly find themselves in serious financial trouble if the economic situation deteriorates further.”