Financially secure shoppers cut spending due to UK economy fears

Three in five shoppers believe that the UK economy is worsening, leading financially secure consumers to cut back their spending, according to KPMG UK.

The amount of people who felt the UK economy was worsening increased by 15 percentage points in the last three months to 58%.

However, 55% of shoppers said they currently felt financially secure, making it two percentage points lower than the previous quarter.

While those that felt insecure about their finances was up from 21% to 24% over the last three months, within this only 15% said their finances were such that they needed to actively reduce discretionary spend to pay for essentials.

The global network found that the increasing negative economic perception was leading to more consumers taking spending action than those who reported their financial situation meant they needed to, with 43% reducing spend on everyday items.

Additionally, 36% said they were saving more money as contingency, while 29% reported putting off big ticket purchases.

The research looked at the confidence of 3,000 UK consumers and assessed their buying behaviour over the last quarter, from December to February.

KPMG UK head of consumer, retail and leisure Linda Ellett said: “Our research continues to show that while only a minority of consumers feel financially insecure, the majority feel that the economy is heading in the wrong direction.

“And this nervousness about the economy is leading many, including some of those who are secure in their current personal financial circumstances, to cut everyday spend, defer big ticket buying, and save more.”

She continued: “Some may be taking this action as they prepare for higher costs, such as a new mortgage deal or the higher cost of travel.

“But other cautious consumers are certainly preparing for the potential impact on them from what they believe to be a worsening economy.  This week’s Spring Statement needs to give people the confidence in the longer-term UK economic outlook.”

The figures come after the British Retail Consortium recently reported that consumer confidence stabilised in March following a record low last month, as Gen Z geared up spend.

Expectations around personal spending on retail over the next three months was up from -5 last month to 0, according to the trade association. 

However, in January the GfK consumer confidence report found that consumer confidence had plummeted to its lowest level in a year.

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