Consumer confidence in the U.K. has plummeted to its lowest point in over a year, primarily driven by rising household costs and concerns regarding the economic repercussions of U.S. trade policies. According to GfK, the consumer confidence index fell by four points to -23 in April, marking the weakest figure since November 2023. This decline is attributed to several factors including domestic tax increases, higher utility bills, and the looming threat of inflation due to tariffs imposed by U.S. President Donald Trump.
Neil Bellamy, consumer insights director at GfK, highlighted the burden on households facing a series of cost increases, such as utility bills and council taxes. He also noted that consumers are increasingly anxious about potential high inflation resulting from the tariffs, which have already caused disruptions in global markets and raised the specter of a broader economic slowdown. In terms of specific data, GfK reported that expectations for the general economic situation over the next year fell by eight points to -37, a notable decline from April 2024.
Additionally, the outlook for personal finances weakened, dropping four points to -3, which is five points lower than the same time last year. Such diminishing levels of confidence often suggest that households will exercise caution and potentially reduce spending on major purchases due to financial uncertainties. Although U.K. inflation has decreased from its late-2022 peak of 11.1% to the current 2.6%, the Bank of England anticipates a temporary rise to 3.7% this summer.
Bellamy warned that another surge in prices, linked to Trump’s trade policies, could lead to a significant drop in consumer confidence, reversing the progress made since the turbulent 2022 mini-budget period.