Ahead of the Chancellor’s spring statement tomorrow, a new survey suggests consumers are reducing their spending on everyday items due to concerns about the British economy.
In the latest Consumer Pulse study (December – February) by KPMG, three in five people said they believe that the UK economy is worsening, leading even consumers who feel financially secure to cut back on spending.
The number of people feeling that the UK economy is worsening grew by fifteen percentage points in the last three months to 58%. But despite the perception of a downbeat economic picture, the majority (55%) of people currently feel financially secure (which is just 2 percentage points lower than the previous quarter).
Those feeling insecure about their finances grew from 21% to 24% over the period, but within that, only 15% of people reported that their finances are such that they are having to actively cut discretionary spend to pay for essentials – with a further 2% saying they are incurring debt to pay bills.
The growing negative economic perception is leading more consumers to take spending action than those who say their financial situation means they need to, with:
- 43% saying they are reducing spend on everyday items.
- 36% saying they are saving more as a contingency.
- 29% saying they are deferring big ticket purchases.
- 19% feeling less inclined to leave their current employment.
Comparing consumer spending in the first quarter of 2025 to the results from the final quarter of 2024:
- Eating out remains the most common target (38%) for those cutting spend. Takeaway was second, with 34% of consumers reporting less spend over the last three months. The number of people saying they are cutting back was 2 percentage points higher than the last survey.
- The number of consumers reporting they cut clothing and footwear spend in the last three months rose 3 percentage points from the last survey to 32%.
Cost-cutting behaviour when shopping was also evident, with:
- Nearly a quarter of consumers (23%) said they shopped for promotional or discount goods more in the last three months.
- Just over a fifth (22%) of consumers said they bought more own brand or value goods in the last three months.
- A fifth (21%) of consumers said they used loyalty schemes more this quarter.
- 70% of consumers said that price was a top purchasing driver for everyday items – rising 3 percentage points from the last survey.
Linda Ellett, head of consumer, retail and leisure for KPMG UK, commented: “Our research continues to show that while only a minority of consumers feel financially insecure, the majority feel that the economy is heading in the wrong direction. And this nervousness about the economy is leading many, including some of those who are secure in their current personal financial circumstances, to cut everyday spend, defer big ticket buying, and save more.
“Some may be taking this action as they prepare for higher costs, such as a new mortgage deal or the higher cost of travel. But other cautious consumers are certainly preparing for the potential impact on them from what they believe to be a worsening economy. This week’s Spring Statement needs to give people the confidence in the longer-term UK economic outlook.”
