Over half of UK consumers think the economy will worsen over the next 12 months, new Which? research has found, as 2.1 million struggle to afford essential payments during the cost of living crisis.
Which?’s latest Consumer Insight Tracker found that recent improvements in consumer confidence in the economy and household finances are showing signs of faltering – with over half (53%) of the UK population saying they believe that the economy will worsen over the next year.
Just a fifth (21%) said that they thought the economy would improve. This gives a net confidence score of -32 for the future of the economy – a five point drop from last month but higher than last October’s score of -63.
A woman in her twenties said: “I don’t see the economy improving anytime soon and we’re barely keeping our head above water.”
Another woman in her fifties said: “Inflation may be coming down, but that just means prices are rising more slowly. Food in particular is still getting more expensive every time I shop. I have been supplementing my income with savings, but my savings are dwindling.”
Overall, consumers’ confidence in their future household financial situation and the UK economy had been slowly increasing since this time last year but in the month to 9 October, it started to show signs of faltering.
Confidence in future household finances remained negative, at -11, with a third (34%) saying that they thought their household’s financial situation would worsen and just a quarter (23%) saying they thought it would improve.
A woman in her fifties said: “Energy costs are high and there has been no announcement of government support for the winter like we had last year.”
Another respondent in her sixties said: “Bills for utilities are all rising, the cost of food is getting higher, as is the cost of fuel, and just about everything else.”
Consumer confidence in the economy is closely linked to household finances, with eight in 10 (79%) of those who think their household finances will worsen also feeling very negatively about the future economy.
Those who felt pessimistic about their future household finances are also more likely to believe bills will increase in the next year. Nine in 10 said they think fuel (90%) and food bills (89%) will increase and more than eight in 10 believe housing costs (85%) and energy (84%) will rise.
In comparison, around six in ten of those who felt positively about their future household finances thought that fuel prices (61%), housing costs (60%) and food bills (59%) would increase over the next year. Just over half (53%) thought energy bills would rise.
Financial difficulty remained high in the month to 9 October. An estimated 2.1 million households missed an essential payment, such as a housing, bill, loan or credit card payment. This is in line with the high missed payment rates of the last few months.
Over half (55%) of households reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. This equates to an estimated 15.5 million households.
Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is lower than the levels seen last October (60%) but much higher than the four in 10 (44%) seen two years ago before the cost of living crisis began.
With winter fast-approaching and energy bills predicted to remain at high levels until the end of the decade, consumers will continue to face financial pressures.
At such a difficult financial time, businesses must do everything in their power to ease pressures on household budgets. Which? is calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help their customers and ensure they are providing value for money.
For example, supermarkets need to make sure affordable, healthy food options – like budget line items – are widely available, energy firms need to ensure their customer service departments are fully staffed and able to support any customers who are struggling to make ends meet and telecoms firms need to properly advertise their social tariffs to eligible customers.
If people are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“With millions struggling to make ends meet during the cost of living crisis, it’s understandable that many consumers continue to be wary about the future of the economy and their own finances.
“As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and telecoms providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”
Notes to editors
Which? cost of living campaign
The consumer champion is running a campaign calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis. More information on the campaign is available here.
Consumer Insight Tracker
The Consumer Insight Tracker is an online poll conducted monthly by Yonder Consulting on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.
Which? estimates that between 6.4 per cent and 8.7 per cent of households missed or defaulted on a housing, bill or credit payment in the last month to October 9th, with an average estimate of 7.6 per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, this scales up to between 1.8 million and 2.5 million households missing a bill payment in the last month, with an average estimate of 2.1 million.
The survey indicates that between 53 per cent and 57 per cent of households made an adjustment to cover essential spending in the last month to October 9th, with an average estimate of 55 per cent. Based on the survey and the ONS estimate for the number of households in 2020 of 28.1 million, Which? estimates that between 14.9 million and 16.1 million households made an adjustment to cover essential spending in the last month, with an average estimate of 15.5 million.
Figure 1: Consumer confidence fell slightly in the month to October 9th
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.
Figure 2: Consumers who think their household situation will worsen are also pessimistic about the direction of the UK economy
Source: Which? Consumer Insight Tracker, Online Poll conducted from 9th-10th October 2023 with 2,088 consumers. The sample is weighted to be nationally representative. Base size for consumers who think their household financial situation will worsen: 714
Figure 3: Consumers who think their household situation will improve are slightly more optimistic about the direction of the UK economy, but still expect price rises
Source: Which? Consumer Insight Tracker, Online Poll conducted from 9th-10th October 2023 with 2,088 consumers. The sample is weighted to be nationally representative. Base size for consumers who think their household financial situation will get better: 452
Figure 4: 7.6% of households said they had missed a payment in the month to October 9th
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. The chart shows the proportion of households who have missed a housing, bill, loan or credit card payment in the last month.
Figure 5: Over half of households made at least one adjustment to cover essential spending in the month to October 9th
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft.
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