Retailers ‘face turbulent few months’ as consumer optimism falls

Negativity around the state of Britain’s finances has damaged confidence in the economic outlook, particularly among older generations, a survey suggests.
Consumer expectations for their personal finances over the next three months have dropped to a score of -6 from a positive score of 1 only a month ago, according to the British Retail Consortium’s consumer index.
Confidence in the state of the economy has worsened significantly to -21, down from -8 eight in August, the BRC-Opinium Consumer Sentiment Monitor poll found. Consumers’ views on how people expect their personal saving to develop also fell, from -4 in August to -9 in September.
However, confidence in personal spending on retail improved by a point to -8, despite confidence in personal savings falling by five points to -9.
“Retailers could face a turbulent few months as consumer confidence has fallen significantly in September,” Helen Dickinson, chief executive of the consortium, said. “Negative publicity surrounding the state of the UK’s finances appears to have damaged confidence in the economic outlook, particularly among older generations.”
Rachel Reeves has been accused of talking down Britain’s economy by warning of “tough choices” to deal with what she says is a worse-than-expected inheritance from the Conservatives. She sought to strike a more optimistic tone in her first speech to the Labour Party conference as chancellor, telling delegates that Britain’s “best days lie ahead”. There remains uncertainty over the scale of tax rises and offsetting public spending increases that are to come in her first budget on October 30.
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Dickinson added: “The budget is a key opportunity to inject some confidence back into the economy, boosting spending and helping to foster much-needed investment by businesses. The broken business rates system is holding back investment in jobs and communities across the retail industry.”
The industry body is calling for the introduction of a retail rates corrector, a 20 per cent adjustment to retail property rates bills, to drive investment in local high streets and communities.
The consortium’s findings tally with those of the long-running GfK survey published earlier in the month, which showed that consumer confidence had tumbled to an eight-month low in September.
Analysts at Shore Capital, a broker, warned that the seven-point drop in the latest survey signified a “clear concern” among consumers. The downbeat economic assessments were “a foot shoot by [Sir Keir] Starmer and Reeves that is causing unnecessary damage to the UK consumer economy and is wiping out the progress achieved over the last six months”.
The drop in confidence is running counter to the experience on the high street, with UK retail sales volumes beating market expectations to reach a two-year high in August.