Consumer expectations for the economy have plunged to a new low as the Government faces continued pressure over public finances, a survey shows.
Expectations for the state of the economy over the next three months have worsened to a figure of minus 34, down from minus 27 in December, according to the British Retail Consortium (BRC) Consumer Sentiment Monitor.
Those aged 18 to 27 – Generation Z – remain the only group to expect the economy to improve, while two-thirds of those aged between 60 and 78 expect it to worsen, the poll found.
Confidence in personal finances also fell one point to minus four, with older generations again remaining the most pessimistic.
Expectations of retail spending and wider spending both fell significantly, although the BRC said much of the drop is likely to be a reflection of the end of the Christmas period as people “tightened their belts for the new year ahead”.
BRC chief executive Helen Dickinson said: “As the Government warns of tough times ahead, it is little surprise that the public have caught the January blues.
“Consumer confidence in the economy fell to a new low, with concerns most pronounced among older generations.”
She added: “On top of this challenging market backdrop, retailers are facing £7 billion in additional costs from the Budget and new packaging levy.
“With retailers’ tight margins leaving little scope to absorb more costs, many are warning of price rises and job cuts in the coming months.
“To mitigate this, and shore up investment in shops and entry level jobs, the Government must ensure that no shop ends up paying a higher business rates bill because of its proposed reforms.”
The survey follows volatility in the UK Government bond market at the start of the year, which sent public sector borrowing costs soaring and led to fears that Chancellor Rachel Reeves is on track to miss her fiscal rules.
She has previously ruled out both increasing borrowing and raising taxes following the significant tax rises in October’s Budget, leaving her with few options beyond further spending cuts.
