The UK’s GfK Consumer Confidence Index fell to minus 44 points in August, its lowest level ever. In the previous month, consumer confidence was measured at negative 41.
According to Trading Economics and Reuters, the index was expected to be negative 42.
GfK has been maintaining consumer confidence data since 1974.
Despair leads to the downfall
GfK shows that all sub-indices declined in August, reflecting acute concerns about the rising cost of living and the bleak economic outlook.
The desperation for the UK economy is the biggest driver, says Joe Staton, director of customer strategy at GfK.
He pointed out that the general economy sub-index has been declining continuously since December 2021.
GfK also saw an equally prolonged decline in its assessment of the economy one year ago, and measuring 60 points for this sub-index is a new record. It is also 54 points weaker than it was in August last year.
These results indicate a sense of resignation, and that economic events are moving beyond the control of ordinary people. With headline after headline revealing record inflation, which is eroding household purchasing power, the strain on the personal finances of many in the UK is alarming, Staton says.
Just making ends meet has become a nightmare, and the crisis of confidence will only get worse with the darker autumn days and the cooler winter months, says Staton.
Biggest price increase since 1982
Inflation in Great Britain in July rose to 10.1 per cent from 9.4 per cent the previous month. This was the largest price increase measured since February 1982.
The Bank of England responded with the strongest interest rate hike in 27 years, as well as announcing that inflation could rise to more than 13 percent in October and that the level of inflation could lead to a long-term stagnation in the British economy.
Bank of England forecasts indicate that the British economy is likely to enter a recession in the fourth quarter, and that the economic downturn may continue throughout 2023 and into 2024.
Last Friday, new GDP figures for the second quarter showed economic growth of 2.9 percent year-on-year, but down 0.1 percent from the previous quarter. However, the consensus was for a 0.2 percent drop on a quarterly basis.
With the cost of living skyrocketing, Britons are now flocking to ATMs to withdraw cash in an effort to control their spending.
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