UK consumer confidence tumbles ahead of Healey's budget, GfK reports

UK Consumer Confidence Index Sees Steepest Decline Since Pandemic Era

Sharp Fall in Consumer Confidence Raises Economic Concerns

By Andy Bruce

Oct 23 (Reuters) - British consumer confidence has suffered its sharpest month-on-month fall since early in the COVID-19 pandemic as economic worries deepen, according to a survey that created an unwelcome backdrop for finance minister John Healey's budget next week.

Survey Results and Historical Context

GfK's consumer confidence index dropped 11 points to -24 in October, its lowest since April and below all the forecasts from economists a Reuters poll. September's reading of -13 was the highest since August 2024.

The drop was biggest from one month to the next since April 2020, just after Britain entered its first coronavirus lockdown. Excluding the pandemic, the last drop on this scale followed the June 2016 Brexit vote.

Factors Behind the Decline

GfK said no single factor explained the slump and pointed instead to rising inflation, the conflict in the Middle East and the broader squeeze on household budgets.

Government Response and Economic Outlook

Healey has said he wants to give households and businesses "breathing space" in his budget. He has struck an upbeat tone on the economy, pointing to growth in the first half of the year that was jointly the fastest in the Group of Seven.

Additional Survey Insights

But surveys this month from S&P Global and LSEG/Ipsos have also shown weaker consumer sentiment, undoing a recovery that took hold around the time Andy Burnham became prime minister.

"The speed of this deterioration is alarming," said Neil Bellamy, consumer insights director at GfK.

Impact on Households and Inflation Expectations

Households' views of the wider economy and their appetite for big-ticket purchases deteriorated sharply with the major purchase index falling to its lowest in more than two years.

Consumers' inflation expectations rose to their highest since April when they reached an almost 3-1/2-year peak. That is likely to concern the Bank of England, which is expected to raise interest rates next month.

Survey Methodology

GfK's survey of 2,003 adults was conducted October 1-14.

(Reporting by Andy BruceEditing by William Schomberg)