Public concern about the economy grows ahead of Chancellor's spring statement
Three in five people say the UK economy is worsening, a new survey has found, with even financially secure consumers cutting back on their spending.
The quarterly consumer pulse survey from accountants KPMG, which quizzed 3,000 respondents at the start of March, will give more headaches for Chancellor Rachel Reeves ahead of her spring statement tomorrow.
The number of people who feel the economy is worsening increased by 15 percentage points in the last three months to 58 per cent.
After coming into power last summer, Ms Reeves and other Cabinet ministers repeatedly criticised the state of public finances that they inherited from the Tories, including a £22bn black hole.
However, KPMG has found that the growing negative economic perception is leading more consumers to reduce their spending.
The survey found that almost half are reducing their spending on everyday items, more than a third are saving more as part of contingency planning and 29 per cent are deferring big purchases.
Linda Ellett, from KPMG UK, 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.
“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 confidence in the longer-term UK economic outlook.”
Yesterday, the Prime Minister said that the Government will not “alter the basics” of its spending in Wednesday’s statement from the Chancellor.
Speaking about plans to cut 15 per cent of the civil service, Sir Keir Starmer told the BBC: “We’re looking across the board. At the Budget last year we made some record investments, and we’re not going to undo that.
“So, for example, we put a record amount into the NHS that’s just delivered five months’ worth of waiting lists coming down five months in a row during the winter. That’s really good.
“So we’re not going to alter the basics, but we are going to look across and one of the areas that we will be looking at is, can we run the government more efficiently? Can we take some money out of Government?
“And I think we can. I think we’re essentially asking businesses across the country to be more efficient, to look at AI and tech in the way that they do their business. I want the same challenge in Government, which is, why shouldn’t we be more efficient?”
Ahead of the spring statement, Ms Reeves and Deputy Prime Minister Angela Rayner announced that £2bn of funding will help build up to 18,000 social and affordable homes.
“We are fixing the housing crisis in this country with the biggest boost in social and affordable housebuilding in a generation,” the Chancellor said.
“Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people's pockets.”