The UK economy is facing significant challenges as consumer confidence continues to wane ahead of the highly anticipated budget announcement on October 30, 2024. Recent data from GfK indicates that consumer confidence fell by one point to minus 21 in October 2024, reflecting growing concerns among households regarding Labour's first budget [604b4ec5]. This decline follows a more substantial drop of seven points in September, which had brought the index to a concerning minus 20 [a962ded7]. Neil Bellamy from GfK noted that consumers are increasingly anxious as they approach the budget reveal, which is expected to address a £22 billion 'black hole' in public finances [604b4ec5].
Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer have indicated that the upcoming budget may include cuts to winter fuel payments, potentially leaving up to 10 million pensioners up to £300 worse off [a962ded7]. The overall sentiment regarding the UK economy remains bleak, with PwC reporting that over 70% of respondents plan to cut back on spending, marking the lowest sentiment level recorded in 2024 [604b4ec5].
In addition to consumer confidence issues, the UK inflation rate has dropped to 1.7% in September, falling below the Bank of England's target, which may influence monetary policy decisions moving forward [604b4ec5]. Despite a modest rise in retail sales volumes by 1% in August, consumers remain cautious about making significant purchases, as indicated by a recent S&P Global survey showing that private-sector investment is currently on hold [604b4ec5].
The Investor Confidence Index has also taken a hit, falling by 10 points to 75, reflecting a decline of nearly 11.2% as investors express concerns about rising capital gains tax bills and potential pension reforms [abd156f5]. This drop in investor confidence is compounded by the negative economic outlook presented by Chancellor Reeves, which critics argue could further dampen consumer sentiment and hinder recovery efforts [a732bc2d].
Asos's plans to sell a 75% stake in Topshop for £180 million and Royal Mail's decision to scrap second-class post on Saturdays highlight the mixed signals within various sectors of the UK economy [58d4d661]. With the British Chambers of Commerce forecasting a slowdown in GDP growth, the overall outlook remains precarious as the UK navigates these economic challenges [3387ac19][58d4d661].