Amid government warnings of tough times ahead, new research suggests consumers caught the January blues and have been cutting back on their spending as a result.
The BRC-Opinium survey shows that consumer expectations of their personal financial situation over the next three months dropped to -4 in January, down from -3 in December.
Expectations for the state of the economy worsened to -34 this month, down from -27 previously, while the measure of personal spending on retail fell to -9 in January, down from -3. Personal spending expectations overall dropped to +4 in January, down from +11, and personal savings increased to -3 in January, up from -5 in December.
“Consumer confidence in the economy fell to a new low, with concerns most pronounced among older generations. Gen Z (18-27) remain the only group to expect the economy to improve, while two-thirds of Boomers (60-78) expect things to get worse,” said Helen Dickinson, Chief Executive of the British Retail Consortium (BRC).
“Feelings around people’s own finances fell slightly, with older generations remaining the most pessimistic. Expectations of retail spending and wider spending both fell significantly, though much of this is likely to be the end of the Christmas period, as people tightened their belts for the new year ahead.
“On top of this challenging market backdrop, retailers are facing £7bn 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.”
