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      Households confident in their finances heading into 2025

      But concern about the economy evident, in new KPMG research

      event 31 Dec, 2024

      The majority of UK households are heading into 2025 feeling financially secure, but more people think the health of the economy is worsening than improving.

      The findings come from KPMG UK’s Consumer Pulse survey, which gauged the quarterly confidence and buying behaviour of 3000 people across regions, ages and income groups during December.

      Financial security:

      Nearly three times more people feel secure (fifty-seven percent) than insecure (twenty-one percent) about their financial situation as 2024 ends, leaving:

      • Half able to spend freely, but larger purchases needing to be planned for by four in ten.
      • A third ‘managing’ but budgeting discretionary spending each month.
      • One in ten ‘impacted’ and having to limit or cut discretionary spend to pay for essential costs.
      • Only three percent unable to pay essential bills or incurring debt in order to do so.

      Economic outlook:

      While the picture for financial security is largely positive, consumer opinion regarding the health of the UK economy was more mixed – with four in ten consumers saying the economy is worsening, compared to a quarter saying it's improving.

      Pessimism about the UK economy is highest among two-thirds of those aged sixty-five and over, with those aged 25-34 the most optimistic. Regionally, London is the most upbeat, with the North East the most downbeat about the economy.

      2025 spending intention:

      Despite mixed opinion on the economic outlook, eighty percent of consumers plan to make big ticket purchases next year - most commonly saying they will spend on a holiday (thirty-nine percent). A fifth of consumers are planning minor home improvements, with one in ten intending to purchase a new car, and a further tenth planning to buy a mobile phone.

      To save money in 2025, (a quarter of) people are most commonly targeting switching car insurance provider, with a quarter also aiming to switch their home insurance to get a more competitive price.

      A wage rise would be the most likely reason to increase an individual’s spending beyond 2024’s levels. A third of consumers say that retailer promotional events could convince them to part with more money during the course of the year, with a quarter saying improved loyalty scheme prices would.

      Reflecting upon the findings, Linda Ellett, Head of Consumer, Retail and Leisure for KPMG UK, said:

      “Whether due to confidence in their ability to spend or their ability to manage household bills, it is positive news that the majority of UK households are heading into 2025 feeling financially secure.

      Despite four in ten people saying the UK economy is worsening, a higher amount than those thinking it is improving, planned spending on big ticket items over the next twelve months looks healthy. Whether that spend comes to fruition will depend on a range of factors, including continued reduction in interest rates and whether perception about economic worsening becomes a reality in the form of increased job insecurity.”

      Spending in the last three months:

      Comparing their spending in the last three months (Sept, Oct, Nov) to the previous (June, July, Aug), eating out was the activity consumers most commonly spent less money on, with groceries the number one category for those spending more money.

      A quarter of consumers reported buying promotional or discounted items more over the last three months, while half of consumers said they bought big ticket items – most commonly on a holiday, followed by household appliances.

      Price was the top purchasing driver for both everyday purchases and one-off higher cost items.

      Linda Ellett added: “Promotional periods and the value consumers place on loyalty pricing throughout the year have all demonstrated that shoppers remain savvy when it comes to searching out better deals. This will continue in 2025 and our research shows that up to a third of consumers may increase their overall spending levels if retailer offers are sufficiently appealing to them. Retailers will be looking to capitalise on this by using customer data and AI to ensure offer targeting is increasingly personalised in the coming twelve months.”

      Linda Ellett
      Linda Ellett

      Head of Consumer, Retail & Leisure

      KPMG in the UK

      - ENDS -

       

      Notes to Editors:

      One Poll, a member of the British Polling Council, surveyed 3000 UK consumers online between December 2 and 9 for KPMG UK. The questions posed were as follows:

      Thinking about your monthly essential costs (i.e. mortgage/rent, utilities, fuel, food, medicine, etc.) and your remaining discretionary spending budget (including savings), how secure or insecure do you currently feel about your financial security?

      • 57% Secure
      • 21%: Neither secure nor insecure
      • 21% Insecure
      • 1%: Prefer not to say

      Which, if any, of the following best describes your current financial situation? [Select best match]

      • 39%: Comfortable - I able to spend freely each month, but have to plan larger purchases
      • 32%: Managing - I budget discretionary spending each month
      • 13%: Impacted – I am having to limit or cut discretionary spend to pay for essential costs
      • 11%: Confident - I am able to spend freely each month on whatever you choose
      • 3%: Troubled – I am unable to pay essential bills or incurring debt in order to do so
      • Prefer not to say: 1%

      Do you think the health of the UK economy of currently improving or worsening?

      • 43%: Worsening
      • 25%: Staying the same
      • 25%: Improving
      • Not sure: 7%

      Comparing your monthly discretionary spending over the past three months (Sept, Oct, Nov) to the three months previous (June, July, Aug), which, if any, of the following have you been spending LESS on? [Select all that apply]

      • 38%: Eating out
      • 32%: Takeaway food
      • 29%: Clothes and footwear
      • 27%: Drinking out
      • 23%: Live entertainment (e.g. cinema, gig or theatre tickets)
      • 20%: Groceries
      • 17%: Beauty products (e.g. make-up)
      • 16%: Beauty services (e.g. pedicure)
      • 14%: Recreational (non-commuting) vehicle / public transport use
      • 12%: TV (Satellite, cable, streaming) or Music services
      • 12%: Gym or fitness classes
      • 12%: Health services (e.g. massage)
      • 11%: Health products (e.g. vitamins or protein powder)
      • 9%: Mobile phone contract
      • 9%: Children’s clothing and accessories
      • 8%: Pet food and products
      • None of the above: 27% (818 consumers)
      • Prefer not to say: 2%

      Comparing your monthly discretionary spending over the past three months (Sept, Oct, Nov) to the three months previous (June, July, Aug), which, if any, of the following have you been spending more on? [Select all that apply]

      • 31%: Groceries
      • 11%: Clothes and footwear
      • 10%: Children’s clothing and accessories
      • 9%: Eating out
      • 9%: Health products (e.g. vitamins or protein powder)
      • 9%: Pet food and products
      • 8%: TV (Satellite, cable, streaming) or Music services
      • 8%: Mobile phone contract
      • 7%: Live entertainment (e.g. cinema, gig or theatre tickets)
      • 7%: Health services (e.g. massage)
      • 7%: Recreational (non-commuting) vehicle / public transport use
      • 6%: Drinking out
      • 6%: Takeaway food 
      • 6%: Gym or fitness classes
      • 6%: Beauty products (e.g. make-up)
      • 5%: Beauty services (e.g. pedicure)
      • None of the above: 41% (1217 consumers)
      • Prefer not to say: 2%

      Comparing when you were shopping over the past three months (Sept, Oct, Nov) to the three months previous (June, July, Aug), which, if any, of the following did you do LESS of? [Select all that apply]

      • 22%: Saving
      • 19%: Buying full-price branded produce
      • 17%: Shopping online
      • 14%: Shopping in-store
      • 11%: Using credit card(s) when making purchases
      • 10%: Using buy now pay later when making purchase
      • 9%: Buying lower-cost branded produce
      • 9%: Using retailer loyalty schemes to get lower prices
      • 9%: Buying products or services due to their sustainable or ethical credentials
      • 8%: Buying own brand / value products
      • 8%: Buying promotional or discounted items
      • 8%: Shopping at a lower-cost retailer
      • 8%: Buying pre-owned goods
      • None of the above: 37% (1098 consumers)

      Comparing when you were shopping over the past three months (Sept, Oct, Nov) to the three months previous (June, July, Aug), which, if any, of the following did you do MORE of? [Select all that apply]

      • 24%: Buying promotional or discounted items
      • 23%: Using retailer loyalty schemes to get lower prices
      • 21%: Buying own brand / value products
      • 19%: Buying lower-cost branded produce
      • 19%: Shopping at a lower-cost retailer
      • 16%: Shopping online
      • 14%: Shopping in-store
      • 13%: Saving
      • 12%: Buying pre-owned goods
      • 11%: Using credit card(s) when making purchases
      • 7%: Buying products or services due to their sustainable or ethical credentials
      • 7%: Using buy now pay later when making purchase
      • 5%: Buying full-price branded produce
      • None of the above: 30% (907 consumers)

      In the past three months which, if any, of the following ‘big ticket’ items have you spent money on? [Select all that apply]

      • 21%: Holiday(s)
      • 16%: Home appliances (e.g. fridge or washing machine)
      • 14%: Minor home improvements (e.g. painting of one room)
      • 14%: Personal technology (e.g. a computer or smart watch)
      • 12%: Home electronics (e.g. TV or sound system)
      • 11%: Furniture (e.g. a sofa or dining table)
      • 10%: Mobile phone
      • 10%: Major improvements (e.g. extension or wide-scale redecorating) to your current home
      • 5%: A brand-new car
      • 5%: A used car
      • 4%: Moved home
      • None of the above: 43% (1283 consumers)

      In the next three months which, if any, of the following ‘big ticket’ items do you plan to spend money on? [Select all that apply]

      • 25%: Holiday(s)
      • 16%: Minor home improvements (e.g. painting of one room)
      • 11%: Major improvements (e.g. extension or wide-scale redecorating) to your current home
      • 11%: Personal technology (e.g. a computer or smart watch)
      • 10%: Mobile phone
      • 10%: Home appliances (e.g. fridge or washing machine)
      • 10%: Furniture (e.g. a sofa or dining table)
      • 9%: Home electronics (e.g. TV or sound system)
      • 6%: A brand-new car
      • 5%: A used car
      • 5%: Moving home
      • None of the above: 44% (1312 consumers)

      Over the past three months, which, if any, of the following have been your top purchasing drivers when buying everyday items? [Select up to three]

      • 67%: Price
      • 49%: Quality
      • 28%: Convenience
      • 22%: Loyalty benefits
      • 13%: Health benefits
      • 12%: Customer experience
      • 12%: Environmental sustainability
      • 5%: Data privacy
      • 4%: Other ethical considerations
      • None of the above: 3% (96 consumers)
      • Don’t know / None in particular: 8% (233 consumers)

      Over the past three months, which, if any, of the following have been your top purchasing drivers when buying one-off larger purchases? [Select up to three]

      • 47%: Price
      • 42%: Quality
      • 17%: Convenience
      • 12%: Loyalty benefits
      • 12%: Customer experience
      • 10%: Environmental sustainability
      • 9%: Health benefits
      • 6%: Data privacy
      • 2%: Other ethical considerations
      • Don’t know/ None in particular: 4% (129 consumers)
      • I haven’t made any larger purchases during the past three months: 25% (740 consumers)

      In 2025, which, if any, of the following ‘big ticket’ items do you plan to spend on? [Select all that apply]

      • 39%: Holiday(s)
      • 21%: Minor home improvements (e.g. painting of one room)
      • 14%: Major improvements (e.g. extension or wide-scale redecorating) to your current home
      • 14%: Home appliances (e.g. fridge or washing machine)
      • 13%: Furniture (e.g. a sofa or dining table)
      • 12%: Personal technology (e.g. a computer or smart watch)
      • 11%: Mobile phone
      • 10%: Home electronics (e.g. TV or sound system)
      • 10%: A brand-new car
      • 7%: Moving home
      • 7%: A used car
      • None of the above: 27% (820 consumers)

      In 2025, which, if any, of the following do you plan to switch your provider for in order to save money? [Select all that apply]

      • 27%: Car insurance
      • 26%: Home insurance
      • 21%: Energy
      • 19%: Broadband
      • 15%: Mobile phone
      • 9%: Mortgage
      • 5%: Car lease
      • None of the above: 48% (1425)

      In 2025, which, if any, of the following would make you more inclined to spend more money on the things you want to buy compared to 2024? [Select all that apply]

      • 39%: A wage increase
      • 30%: Retailer promotion or discount events
      • 30%: A bonus
      • 23%: Improved retailer loyalty scheme prices
      • 12%: Lower savings rates
      • None of the above: 20% (590 consumers)
      • Not sure: 16% (470 consumers)

      In 2025, which, if any, of the following will be your top purchasing drivers when buying everyday items? [Select up to three]

      • 71%: Price
      • 56%: Quality
      • 27%: Convenience
      • 22%: Loyalty benefits
      • 13%: Customer experience
      • 12%: Health benefits
      • 12%: Environmental sustainability
      • 5%: Data privacy
      • 2%: Other ethical considerations
      • Don’t know/ None in particular: 7% (224 consumers)
      • None of the above: 2% (72 consumers)

      In 2025, which, if any, of the following will be your top purchasing drivers when buying one-off larger purchases? [Select up to three]

      • 58%: Price
      • 52%: Quality
      • 18%: Convenience
      • 14%: Customer experience
      • 13%: Loyalty benefits
      • 12%: Environmental sustainability
      • 8%: Health benefits
      • 6%: Data privacy
      • 4%: Other ethical considerations
      • I won’t be purchasing any one-off larger purchases in 2025: 13% (391 consumers)
      • Don’t know/ None in particular: 6% (194 consumers)
      • None of the above: 1% (29 consumers)

       

      About KPMG UK

      KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 18,000 partners and staff. The UK firm recorded a revenue of £2.96 billion in the year ended 30 September 2023.

      KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 273,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.