LONDON – Pessimism has hit British families at an unprecedented level as the cost-of-living crisis has pushed economic confidence to a collective low, a survey shows.
Market research firm GfK says that the consumer morale measure of 1974, reached an all-time low of -40 from April-38 to May. Economists surveyed by Reuters had expected -39.
This low in the past has predicted a recession, and Friday’s survey will put even more pressure on Finance Minister Rishi Sunak to urgently provide more assistance to families facing high inflation rates in the early 1980s.
GfK’s measure of economic optimism for the next 12 months matched the record low hit in April 2020 as the coronavirus epidemic swept the country.
Although business surveys and job data show a healthy picture – one of the reasons why the Bank of England raised interest rates – it was in 2008 when the global financial crisis unfolded and a severe recession hit.
“Consumer confidence is weaker now than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the cowardly shutdown,” said Joe Staton, GfK’s Client Strategy Director.
Even the recession of the early 1980s and early 1990s – during a double-digit interest rate and high unemployment – created less frustration than the current crisis that is unfolding against the backdrop of the war in Ukraine.
Britain’s budget forecasters say families are facing the biggest stress of life since the record began in the 1950s.
Reuters’ analysis of international consumer confidence data suggests that government action could now be confirmed.
British consumers are more depressed than their French or German counterparts, which was on record until 1985, when GfK’s method was applied in a European Commission survey.
Among the largest economies in Europe, Britain has the highest inflation and is in the Group of Seven.
Separate data released by Lloyds Bank found that energy consumption by its customers rose 28% year-on-year in April.
The BoE predicts that inflation will be in the top 10% by the end of this year and investors are expecting further interest rate hikes.
“Nothing on the economic horizon soon shows cause for optimism,” Staton said. (Edited by William Schumberg by Andy Bruce)