The mood among UK households about their finances is “dismal”, according to research which suggested consumer spending remains sluggish and debts are mounting.
Consumer confidence in the UK is running at its lowest level in two years, a survey by S&P Global found, as households worry about their debts, their future financial prospects, and their savings.
S&P said consumers’ pessimism “matches the dismal weather seen so far this year” and said the recent wet weather had “not helped to lift the low spirits seen among households”.
The UK Consumer Sentiment Index survey, which has been running since 2009, posted a reading of 44.8 in February. Any reading above 50 signals a general improvement in consumer confidence, while anything below suggests a deterioration.
While this month’s index reading was up slightly from 44.6 in January, it remained among the weakest figures over the past two years. The S&P report contrasts with recent business surveys, which have suggested a rise in optimism among companies since the start of the new year after uncertainty over the government’s autumn budget lifted.
Maryam Baluch, an economist at S&P Global Market Intelligence, said: “A period of prolonged rain and a dearth of sunshine have no doubt not helped to lift the low spirits seen among households, but there’s more going on here than just bad weather.
“Households are growing increasingly worried about debt in particular, especially as a rising need for credit was met with the steepest decline in availability of loans since August 2024.”
The survey said households are accumulating debt at a pace not seen since July. All age groups recorded a rise in debt, except those from 18 to 34, but the steepest rate of debt increase was among 18- to 24-year-olds.
The unemployment rate for 18- to 24-year-olds is now at its highest level since 2020, according to official figures. Catherine Mann, a member of the Bank of England’s interest rate setting committee, told the Sunday Telegraph she believes the policy of successive governments pushing up the minimum wage for this age group had “manifested in unemployment” for younger workers.
The S&P survey comes a day before the latest official figures for the UK on employment and wages are released for the final three months of 2025. Unemployment is expected to remain at 5.1%, while annual growth in average earnings is expected to have slowed to 4.2%, from 4.5% in September to November.
The S&P survey showed households were more pessimistic about their financial prospects for the coming 12 months than they were in January. All regions and nations of the UK recorded drops in their savings and amount of cash they have available, with the steepest falls in the East Midlands, Northern Ireland and Yorkshire.
The appetite for making big purchases slipped to its lowest level in 10 months, owing to a lack of confidence about future finances and debt worries.
Baluch said: “The low appetite to spend bodes ill for the broader impetus to purchase, hinting at a sustained drag on economic growth from sluggish consumer spending in the first quarter.”
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