Market research company GfK said that its Consumer Confidence Index for the UK in May dropped to its lowest level since records began in 1974 amid the country’s raging cost-of-living crisis.
May’s result, down two points from April to minus 40, is one point below the previous record set in July 2008, when the headline score plunged to minus 39, Xinhua news agency quoted Joe Staton, client strategy director at the GfK, as saying on Friday.
“This means consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the Covid shutdown,” he added.
According to Staton, this comes as UK unemployment hits a 50-year low with vacancies outnumbering job seekers for the first time, and inflation peaking at a 40-year high driven by soaring food and fuel bills.
The UK Consumer Price Index rose by 9.0 per cent in the 12 months to April 2022, up from 7.0 per cent in March.
The country’s central bank expected inflation to rise further over the remainder of the year to just over 9 per cent in the second quarter (Q2) and averaging slightly over 10 per cent at its peak in Q4.
With surging prices, households in the UK have felt the squeeze.
In April, the Scottish Widows Household Finance Index showed that household savings in the UK declined at the steepest pace for nine years in the first quarter of this year amid the quickest reduction in cash availability since the final quarter of 2013.
Amid the crisis, the poorest have borne the brunt. While everyone is affected by the tightest squeeze on household incomes in half a century, low-income households are facing the toughest time, said the Resolution Foundation, a think tank.
British charity Citizens Advice noted that by mid-May, it had helped more than 750 people each day with referrals to food banks, and in the first third of the year, it saw more cases of people unable to top up their prepayment metre than in the whole of 2021 combined.
A report by the professional services network Deloitte showed that half of the UK’s Gen Zs (generation born between 1997 and 2012) and millennials use all their monthly income on living costs, whilst two in five have taken on a side hustle to make ends meet.
To lessen the costs for millions of households, Chancellor Rishi Sunak announced in March that the government will raise the income threshold for people to start paying National Insurance by about 3,000 pounds ($3,740) to 12,570 pounds in July.
It is a 6-billion-pound tax cut for 30 million people across the country, and a tax cut for employees worth over 330 pounds a year, according to Sunak.
Also, this year all domestic electricity customers will receive an upfront discount on their bills worth 200 pounds. Energy suppliers will apply the discount on people’s bills from October.
In April, the government also introduced a 150-pound council tax rebate to help with the cost of energy, which will benefit around 80 per cent of all homes in the country.
Problems with the governmental assistance have already emerged. British charity National Energy Action pointed out that the country’s poorest households are struggling to get the 150-pound council tax energy rebate.
While those who pay by direct debit should receive the money automatically, those who pay in other ways or who are exempt from council tax have to apply.