UK Consumer Confidence Dips on Pre-Budget Jitters

UK Consumer Confidence Dips on Pre-Budget Jitters

Friday 25th October 2024 – 09:05 (BST)

The GfK Consumer Confidence Index in the UK fell to -21 in October, down from -20 in September, marking the lowest level this year. The slide comes amid expectations of tax hikes in next week’s budget, dampening sentiment among households and businesses. Three of the index’s five components weakened, signalling growing unease.

“With the budget statement looming, consumers are in a despondent mood despite a fall in inflation,” said Neil Bellamy, GfK’s consumer insights director.

Prime Minister Keir Starmer and Chancellor Rachel Reeves have hinted at tax increases to address the government’s budget shortfall. Meanwhile, a recent slowdown in inflation and wage growth has led traders to speculate on potential rate cuts from the Bank of England by year-end.

The weaker consumer sentiment has added pressure on the British pound, which has seen increased volatility in recent sessions. Concerns over potential fiscal tightening and economic headwinds have led to a slight dip in GBP value against major currencies, as traders assess the potential impact of tax hikes and anticipate further rate decisions from the Bank of England.