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      Consumer confidence in the UK economy falls

      Lower confidence in the economy is impacting spending
      event 26 Mar, 2025

      Three in five people say that the UK economy is worsening, leading even consumers feeling financially secure to cut back on spending, according to the latest quarterly Consumer Pulse survey from KPMG in the UK.

      The number of people feeling that the UK economy is worsening grew by fifteen percentage points in the last three months to 58%. But despite the perception of a downbeat economic picture, the majority (55%) of people currently feel financially secure, which is just 2 percentage points lower than the previous quarter.

      The research gauged the confidence of 3000 UK consumers and assessed their buying behaviour over the last quarter (December - February).

      Those feeling insecure about their finances grew from 21% to 24% over the last three months, but within that only 15% of people reported that their finances are such that they are having to actively cut discretionary spend to pay for essentials - with a further 2% saying they are incurring debt to pay bills.

      The growing negative economic perception is leading more consumers to take spending action than those who say their financial situation means they need to, with:

      • 43% saying they are reducing spend on everyday items.
      • 36% saying they are saving more as a contingency.
      • 29% saying they are deferring big ticket purchases.
      • 19% feeling less inclined to leave their current employment.

      Reflecting upon the findings, Linda Ellett, Head of Consumer, Retail and Leisure for 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 the confidence in the longer term UK economic outlook.”

      Quarter to quarter spending:

      Comparing consumer spending in the first quarter of 2025[1] to the results from the final quarter of 2024:

      • Eating out remains the most common target (38%) for those cutting spend. Takeaway was second, with 34% of consumers reporting less spend over the last three months. The number of people saying they are cutting back was 2 percentage points higher than the last survey (in December).
      • The number of consumers reporting they cut clothing and footwear spend in the last three months rose 3 percentage points from the last survey to 32%.

      Cost cutting behaviour when shopping was once again evident, with:

      • Nearly a quarter of consumers (23%) saying they shopped for promotional or discount goods more in the last three months.
      • Just over a fifth (22%) of consumers saying they bought more own brand or value goods in the last three months.
      • A fifth (21%) of consumers saying they used loyalty schemes more this quarter.
      • 70% of consumers said that price was a top purchasing driver for everyday items – rising 3 percentage points from the last survey.

      Holiday spend was again the most common ‘big ticket’ quarterly spend, with 21% of consumers reporting related spend in the last three months. 30% of consumers say they will spend on a holiday in next three months.

      45% of consumers said they bought no ‘big ticket’ items in December, January and February. And 38% said they won’t make any larger purchases in the coming three 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 March 5 and 11 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?

      • 55% Secure
      • 19%: Neither secure nor insecure
      • 24% Insecure
      • 2%: Prefer not to say

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

      • 10%: Confident - I am able to spend freely each month on whatever you choose
      • 39%: Comfortable - I able to spend freely each month, but have to plan larger purchases
      • 32%: Managing - I budget discretionary spending each month
      • 15%: Impacted – I am having to limit or cut discretionary spend to pay for essential costs
      • 2%: Troubled – I am unable to pay essential bills or incurring debt in order to do so
      • Prefer not to say: 2%

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

      • 58%: Worsening
      • 25%: Staying the same
      • 10%: Improving
      • Not sure: 7%

      Which, if any, of the following is your perception about the current health of the UK economy making you do? [Select all that apply]

      • 43%: Reduce monthly spending on everyday items
      • 36%: Save more as a contingency
      • 29%: Defer making big ticket purchases
      • 19%: Be less inclined to leave your current employment
      • 24%: None of the above

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

      • Eating out: Less 38% / More 8%
      • Takeaway food: Less 34% / More 6%
      • Clothes & footwear: Less 32% / More 8%
      • Drinking out: Less 28% / More 5%
      • Live entertainment (e.g. cinema, gig, theatre tickets): Less 22% / More 6%
      • Groceries: Less 19% / More 30%
      • Beauty products (e.g. make-up): Less 18% / More 5%
      • Beauty services (e.g. pedicure): Less 15% / More 4%
      • Recreational (non-commuting) vehicle / public transport use: Less 13% / More 5%
      • TV (Satellite, cable, streaming) or Music services: Less 11% / More 9%
      • Gym or fitness classes: Less 10% / More 6%
      • Health services (e.g. massage): Less 11% / More 5%
      • Health products (e.g. vitamins or protein powder): Less 11% / More 8%
      • Mobile phone contract: Less 8% / More 7%
      • Children’s clothing and accessories: Less 7% / More 7%
      • Pet food and products: Less 6% / More 10%
      • None of the above: Less 27% / More 43%
      • Prefer not to say: Less 3% / More 2%

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

      • Buying full-price branded produce: Less 20% / More 5%
      • Shopping online: Less 18% / More 13%
      • Shopping in-store: Less 13% / More 14%
      • Using credit card(s) when making purchases: Less 11% / More 11%
      • Buying own brand / value products: Less 8% / More 22%
      • Using buy now pay later when making purchase: Less 8% / More 6%
      • Using retailer loyalty schemes to get lower prices: Less 8% / More 21%
      • Buying lower-cost branded produce: Less 7% / More 19%
      • Buying promotional or discounted items: Less 7% / More 23%
      • Shopping at a lower-cost retailer: Less 7% / More 20%
      • Buying pre-owned goods: Less 7% / More 12%
      • Buying products or services due to their sustainable or ethical credentials:
        • Less 7% / More 5%
        • None of the above: Less 37% / More 32%

      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)
      • 12%: Home appliances (e.g. fridge or washing machine)
      • 12%: Minor home improvements (e.g. painting of one room)
      • 11%: Personal technology (e.g. a computer or smart watch)
      • 9%: Home electronics (e.g. TV or sound system)
      • 9%: Furniture (e.g. a sofa or dining table)
      • 9%: Mobile phone
      • 7%: Major improvements (e.g. extension or wide-scale redecorating) to your current home
      • 4%: A brand-new car
      • 4%: A used car
      • 3%: Moved home
      • None of the above: 45%

      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]

      • 30%: Holiday(s)
      • 16%: Minor home improvements (e.g. painting of one room)
      • 10%: Furniture (e.g. a sofa or dining table)
      • 9%: Major improvements (e.g. extension or wide-scale redecorating) to your current home
      • 9%: Personal technology (e.g. a computer or smart watch)
      • 9%: Home appliances (e.g. fridge or washing machine)
      • 7%: Mobile phone
      • 7%: Home electronics (e.g. TV or sound system)
      • 6%: A brand-new car
      • 6%: A used car
      • 5%: Moving home
      • None of the above: 38%

      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]

      • 70%: Price
      • 51%: Quality
      • 28%: Convenience
      • 22%: Loyalty benefits
      • 14%: Health benefits
      • 9%: Environmental sustainability
      • 8%: Customer experience
      • 5%: Data privacy
      • 3%: Other ethical considerations
      • None of the above: 3%
      • Don’t know / None in particular: 6%

      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]

      • 52%: Price
      • 44%: Quality
      • 16%: Convenience
      • 12%: Customer experience
      • 11%: Loyalty benefits
      • 9%: Environmental sustainability
      • 9%: Health benefits
      • 6%: Data privacy
      • 2%: Other ethical considerations
      • None of the above: 11%
      • Don’t know/ None in particular: 15%

      About KPMG:

      KPMG LLP, a UK limited liability partnership, operates across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.99 billion in the year ended 30 September 2024.

      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 275,000 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.