UK family confidence within the financial system has dipped for the primary time in six months, in line with the most recent findings from the GfK client confidence survey.
The long-running index, which dates again to the Seventies, remained unchanged at -13, a determine barely above the long-term common of -18 however beneath Metropolis analysts’ expectations.
This decline in optimism displays mounting considerations concerning the financial outlook for the following 12 months. GfK’s financial optimism index fell by 4 factors to -15, marking its first decline since February. Households are additionally much less assured concerning the financial system’s efficiency over the previous 12 months, a interval marked by a recession.
In distinction to the gloom surrounding the broader financial system, households have turn out to be extra constructive about their private funds for the 12 months forward. The GfK funds index rose by 3 factors to +6, buoyed by a latest discount in mortgage rates of interest. The Financial institution of England’s determination on August 1 to chop the bottom fee from 5.25 per cent to five per cent, the primary discount since March 2020, has offered some reduction to debtors, with expectations of additional cuts this 12 months.
The survey additionally highlighted a major enhance within the financial savings index, which climbed 6 factors to 33. This implies that customers are selecting to avoid wasting fairly than spend, capitalising on increased rates of interest amid financial uncertainty.
Whereas client confidence stays increased than in earlier years—having recovered from its report low of -49 in September 2022—GfK’s shopper technique director, Joe Staton, emphasised that the broader financial outlook stays precarious. He famous that regardless of the combined outcomes, the general confidence figures are significantly extra constructive in comparison with a 12 months or two in the past.
The sharp decline in client confidence in September 2022 coincided with the aftermath of the controversial mini-budget introduced by Liz Truss and Kwasi Kwarteng, which triggered monetary market turmoil and drove mortgage charges increased.
