Confidence in personal finances, economy drop in UK in Oct: Barclays

Essential spend declined by 2.5 per cent for the sixth consecutive month, while growth in discretionary spending was flat (plus 0.1 per cent), as a combination of pre-budget anticipation, upcoming Black Friday deals and milder weather led consumers to delay purchases or cut back across a number of categories.

In October, all seven measures of consumer and economic confidence tracked by Barclays declined for the first time since August 2022, when the Bank of England announced its biggest base rate increase in 27 years.

Confidence in the strength of the UK, European and global economies declined month on month (MoM) by 22 per cent, 28 per cent and 23 per cent. However, confidence in household finances fell most significantly, from 74 per cent to 63 per cent.

The proportion of those confident in their job security and ability to spend on non-essential items both reached their lowest points since 2023, at 44 per cent and 51 per cent respectively—down from 47 per cent and 60 per cent in September.

Those lacking confidence in household finances cited the cost of living (54 per cent), a pessimistic outlook for the year ahead (41 per cent) and inflation outpacing wage growth (30 per cent) as their top causes for concern.

In contrast, those who do feel confident listed having little or no debt (58 per cent), careful budget management (50 per cent) and having a savings buffer (43 per cent) as the main contributing factors. Baby boomers are the most likely generation to say they’re confident in their household finances, at 71 per cent, a release from Barclays said.

In anticipation of the budget, 41 per cent of consumers are adjusting their finances. Of this group, 37 per cent are making cutbacks to reduce spending, 33 per cent are putting off discretionary purchases and 30 per cent are building up a savings buffer.

One third (33 per cent) overall say they’re holding off on making major financial decisions until after the Budget, rising to 44 per cent for Gen Z.

ALCHEMPro News Desk (DS)