Consumer confidence sinks to record low despite spending resilience

Confidence in the state of the economy remained at a record low in April, underlining the growing strain on households even as spending shows surprising resilience.

The headline measure for the economy held at -53, unchanged from March and the lowest level on record, signalling deep pessimism about the UK’s economic outlook.

Households also reported a deterioration in their finances, with the personal financial situation index falling to -21 in April, down from -17 the previous month — another record low.

Despite this bleak sentiment, consumer behaviour tells a more mixed story.

Retail spending edged up to +5 in April, from +2 in March, while overall personal spending rose to +15, compared with +13 a month earlier.

The data suggests that while households are increasingly worried about their financial position, they have not yet significantly cut back on day-to-day expenditure.

However, savings remain under pressure, with the personal savings index stuck at -8, indicating that many consumers continue to dip into reserves to maintain spending.

Economists say the divergence between confidence and spending could prove temporary, warning that persistently weak sentiment may eventually feed through into reduced consumption if financial pressures intensify.

For now, the figures paint a picture of an economy where consumers are increasingly anxious — but not yet pulling back — raising questions about how long that balance can be sustained.

Helen Dickinson, Chief Executive of the British Retail Consortium, said: “The Middle East conflict continues to stoke consumer anxiety around inflation and the cost of living.

“Amid a volatile geopolitical situation, households are expecting to see their pay packets squeezed by rising petrol, domestic energy, and food prices.

“Expected retail spending rose, but this was driven entirely by grocery spend, with most consumers expecting to rein in spending in other areas.

“The longer volatility drags on, the more uncertainty it creates in the economy. Businesses are battered by higher energy costs while also grappling with the growing burden of domestic policy pressures.

“From new packaging taxes to incoming employment and health regulations, the government has levers it can pull to limit the inflationary fallout. Taking early, decisive action would help shield consumers from a spike in the cost of living they simply can’t afford.”