A survey by the British Retail Consortium (BRC) suggests consumer confidence in the UK has been severely knocked by the global financial market turmoil unleashed by US President Donald Trump’s tariff announcements earlier this month.
The trade body found that the balance of consumer expectation about the state of the economy over the next three months sank to its lowest in at least a year at -48 in April, down from -35 in March. Expectations about their personal financial situation also worsened to -16, down from -10 the previous month. However, their outlook on personal spending on retail rose to +3, up from 0.
“With fieldwork completed just days after Donald Trump’s ‘Liberation Day’ tariffs, it is unsurprising that consumer expectations for the economy plummeted to a record low,” said Helen Dickinson, Chief Executive of the BRC.
“The original tariff schedule, since reduced for most countries, was expected to reduce growth in the UK and elsewhere. Yet despite this economic pessimism, expectations of retail spending rose slightly as the prospect of Easter shopping drew closer. Unsurprisingly, expected spending on groceries saw the largest increase, with over 4 in 10 expecting to spend more in the coming months, rising to half of the over 55s. Meanwhile, Gen Z planned to take advantage of the improving weather, with rising spending expectations for eating out and health & beauty products.”
Dickinson concluded: “Even with a pause on many of the US tariffs, business and consumer confidence remains fragile. The risk of higher global prices is an unwanted addition to the £7bn in new costs hitting retailers this year from higher employer National Insurance, increased NLW, and a new packaging tax.”
NAM Implications:
- The tariffs issue has imposed even more uncertainty on distrustful consumers.
- Meaning that the probability that expectations of retail spending rising slightly…
- …will be dismissed as a glitch as the tariff turmoil unwinds.
- While pipeline costs emerging will bring higher inflation…
- …leading to consumers increasing reluctance to spend.
- Suppliers and retailers need to accommodate this reality and inevitability in strategies going forward…
