UK consumer confidence falls to lowest level since 1974

Consumer confidence in the UK has fallen to the lowest level since records began in 1974 amid growing concern over the cost of living crisis.

Stoking fears that Britain is heading for a recession caused by the squeeze on family budgets, the latest monthly snapshot showed consumers are now gloomier about their prospects than they were during the 2008 financial crisis.

Almost all confidence measures tracked by the polling firm GfK fell in May, continuing a steep decline from April when households were hit by record increases in energy bills after the rise in the Ofgem price cap.

The headline UK consumer confidence index, a measure of how people view their personal finances and the wider economic outlook, dropped by two percentage points to -40 in May, surpassing the previous record low of -39 set in July 2008 when the global banking system was imploding.

Joe Staton, client strategy director at GfK, said: “This means consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the Covid shutdown.”

Consumer confidence May 2022

Economists warned in April when the index dropped to -38 that such a low reading was consistent with Britain’s economy falling into recession, because it had closely tracked UK GDP over the past five decades.

“That correlation has been robust to many economic regimes and shocks, from 1970s stagflation to the great moderation and the financial crisis,” said Robert Wood, UK economist at the Bank of America. “Consumer confidence matters because it gives an early, reliable, signal.”