British Consumers Grow Gloomy Following Labour's Policy Changes

By David Milliken
LONDON (Reuters) – British consumers have become increasingly pessimistic over the past month due to the new Labour government's removal of a welfare benefit for pensioners and warnings of tax increases in next month's budget, according to a survey released Thursday by a trade body.

The British Retail Consortium (BRC) reported that households' assessment of the general economic situation over the next three months fell to -21 in September, down from -8 in August. This reading, which reflects the difference between positive and negative views among respondents, marks the lowest since the survey's initial reading of -23 in March.

"Negative publicity surrounding the state of the UK's finances appears to have damaged confidence in the economic outlook, particularly among older generations," stated BRC Chief Executive Helen Dickinson.

September marks the first time the BRC has published survey results based on a sample of 2,000 adults, conducted by market research company Opinium between September 10 and September 13.

The findings align with last week's reports from the longer-running GfK consumer survey, which also fell to a six-month low due to worries about the upcoming budget.

Prime Minister Keir Starmer and Finance Minister Rachel Reeves, elected in July, pledged to rebuild the economy after claiming to inherit the most challenging financial circumstances since World War Two. Reeves announced the removal of a £200 ($265) fuel subsidy for 10 million pensioners and indicated that taxes would likely rise more than previously anticipated following Labour's election victory in July.

The BRC survey illustrated a dip in households' outlook for their personal finances, dropping to -6 from -1, its lowest since the survey began. However, spending intentions saw a slight increase, edging up to -8 from -9.

Additionally, S&P Global reported a downturn in business activity, as many companies are delaying plans until there is greater clarity on taxation and employment law changes. Conversely, a separate survey released by the Recruitment and Employment Confederation indicated that employer sentiment for the third quarter of 2024 was slightly less negative compared to the three months ending in June.