Britons are reducing their spending on everyday items amid falling consumer confidence in the economy ahead of the chancellor’s spring budget, according to a new survey.
Rachel Reeves has ruled out “tax and spend” policies in her spring statement on Wednesday, however, she is under pressure to increase taxes or cut spending to meet the financial rules she set in October.
This comes amid disappointing economic growth figures and higher-than-expected government borrowing.
The Consumer Pulse survey from KPMG found three in five people think the UK economy is worsening, meaning that even financially secure consumers are cutting back their spending on everyday items.
According to the poll, the number of people who think the economy is degrading grew by 15 per cent in the last three months to 58 per cent.
The survey of 3,000 UK consumers explored their buying behaviour in the three months to February. Those feeling insecure about their finances grew from 21 per cent to 24 per cent from December to February.
More than four in 10 said they are reducing their spend on everyday items and 36 per cent said they are saving more as a contingency. Nearly one in three people surveyed said they were deferring the purchase of big-ticket items.
When she delivers her spring statement on Wednesday, Ms Reeves will be responding to new forecasts from the Office for Budget Responsibility made after the Bank of England reduced its forecasts for growth this year.
Public sector net borrowing was £10.7 billion in February, £4.2 billion more than had been forecast by the OBR.
Government departments have been asked to go through their spending line by line.
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.”
“Some may be taking this action as they prepare for higher costs, such as a new mortgage deal or the higher cost of travel,” she added.
“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.”
