Rachel Reeves has been dealt another major economic blow ahead of the November Budget as consumer card spending falls. Following an uplift in August, consumer confidence in the strength of the UK, European and global economy all fell in September, to 25%, 29% and 26% respectively (down from 28%, 31% and 28%), according to new data from Barclays. The figures show that Brits are reducing their expenses as consumer card spending declined -0.7% year-on-year in September.
This is down from the 0.5% growth in August and lower than the latest Consumer Prices Index including owner occupiers’ housing costs (CPIH) inflation rate of 4.1%. Essential spending also fell by -2.6% for the fifth consecutive month in September, while growth in discretionary spending slowed to 0.2% – a 15-month low.
Amid increasing bills and a higher cost-of-living, two in three Brits (64%) say they are trying to spend less on groceries.
According to the figures, this trend looks likely to continue as almost half (46%) of consumers say they are planning to reduce non-essential costs.
The data comes as another setback for the Chancellor, who is set to make her annual fiscal announcement next month. Ms Reeves’ popularity continues to dwindle after her October Budget last year, with recent YouGov polling for The Times showing that 55% of Brits believe Sir Keir Starmer should sack the Chancellor.
The polling also shows that just 16% said she should remain in the job, with even a majority of Labour voters wanting Ms Reeves replaced as chancellor – 41% say she should be sacked and 30% say she should remain in post.
However, the Barclays’ report states that consumers’ confidence in their ability to live within their means reached its highest level in over four years, at 78%, while confidence in household finances climbed to 74%.
This comes as almost half of UK adults say they are making changes to their personal finances in anticipation of November’s Autumn Budget, with a third of this group building a savings buffer as a fallback.
Karen Johnson, Head of Retail at Barclays, said: “It is encouraging to see that UK consumers feel confident in their ability to manage their budgets, amid ongoing cost of living concerns. We’re continuing to see cautious spending, and shoppers are consistently seeking out areas they can cut back on. However, multiple retail categories have proven to be resilient in recent months, with furniture, clothing, and beauty all remaining in growth since February of this year.”