Retailers be warned. Declining confidence in the UK economy means consumers are cutting back spending, according to a survey by KPMG seen by The Guardian newspaper.
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Ahead of the government’s spring statement, the report showed increasing numbers believe the economy’s heading in the wrong direction. Its survey of 3,000 UK consumers shows 58% feel the UK economy worsened in the three months to the end of February, an increase of 15% from the three months to the end of November.
Although most people reported feeling financially secure, as many as 43% of consumers said they were reducing their spending on everyday items, while more than a third reported saving more as a contingency, and 29% said they were deferring the purchase of big-ticket items.
According to the KPMG survey, the number of people feeling insecure about their personal finances grew from 21% to 24%. Within that, 15% of people said they were having to cut discretionary spending to pay for essentials, while 2% said they were incurring debt to pay bills.
Linda Ellett, the head of consumer, retail and leisure at KPMG UK, said growing nervousness about the economy was leading some households to cut their spending even if they were currently in a secure financial position.
She said: “Some may be taking this action as they prepare for higher costs, such as a new mortgage deal or the higher cost of travel. But other cautious consumers are certainly preparing for the potential impact on them from what they believe to be a worsening economy.
“This week’s spring statement needs to give people the confidence in the longer-term UK economic outlook.”
