Unlock the Editor’s Digest without cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
UK shopper confidence plunged in April to the bottom degree in properly over a 12 months as issues over Donald Trump’s international commerce warfare and rising residing prices hit family sentiment.
The GfK shopper confidence index — a measure of how individuals view their private funds and broader financial prospects — fell 4 factors to minus 23 in April, the analysis group stated on Friday.
The drop from March worn out good points thus far this 12 months and took the studying to its lowest level since November 2023, when households have been contending with surging mortgage and rental prices.
Neil Bellamy, shopper insights director at GfK, stated households had been hit by “a number of April value will increase” in power, water and telecoms payments, in addition to rises in stamp obligation, council tax and highway prices.
“They’re additionally listening to dire warnings of renewed excessive inflation on the again of the Trump tariffs,” he added.
Bank of England policymakers and economists have warned that the tariffs — that are being levied at 10 per cent on UK merchandise and unleashed turmoil throughout monetary markets — will hit financial progress. Their impact on inflation stays unclear, nonetheless, given uncertainty over how different nations would possibly reply.
Excessive uncertainty has additionally hit enterprise sentiment, with non-public sector exercise contracting on the quickest tempo in additional than two years in April, in line with the S&P World flash UK PMI composite output index.
The worsening shopper sentiment — a shift that might weigh on progress through decrease family spending — was confirmed by different measures of confidence this week, with indices offered by the British Retail Consortium and S&P World each falling in April.
Maryam Baluch, economist at S&P World Market Intelligence, stated customers’ issues over disruption to international commerce and their private funds meant “we’re more likely to see a extra prudent strategy to buying and financial savings within the coming months”.
In contrast with March, customers have been extra pessimistic about all measures tracked within the GfK survey, which was carried out within the first half of this month.
Falling family and company confidence dangers derailing the inexperienced shoots proven in official information this 12 months.
In February, the financial system beat expectations to develop 0.5 per cent, leaving it on monitor to beat the BoE’s forecast of a 0.25 per cent improve within the first three months of 2025.
Output in shopper companies, reminiscent of bars and eating places, rose 0.6 per cent within the three months to February, the quickest tempo in a 12 months, signalling enhancements after shopper spending disenchanted for many of 2024.
Inflation additionally fell greater than forecast in March to 2.6 per cent, and wage progress remained robust within the three months to February, supporting family incomes, in line with official figures printed final week.
Shoppers have constructed up sizeable financial savings since Covid-19, with wages outpacing inflation for practically two years whereas spending has remained subdued.
The pattern had spurred expectations of a rebound in family consumption: just a few months in the past, economists forecast progress of 1.3 per cent this 12 months, greater than double the 0.6 per cent registered in 2024.
However these hopes have dimmed: the newest figures from Consensus Economics, which collates projections from main forecasters, present expectations at simply 0.9 per cent.
Friday’s GfK information added to the darker outlook, with the index monitoring expectations for the economy within the 12 months forward dropping by 8 factors to minus 37, the bottom degree since March 2023.
The long run indicator on customers’ view of their private funds additionally “slipped badly”, dropping 4 factors to minus 3, in line with the survey.
