Consumer confidence in Scotland has fallen in line with the rest of the UK, dropping five percentage points to -16%, according to the latest Deloitte research.
Scottish consumer confidence in the state of the economy has dropped by eight percentage points to -71%, although this was a less dramatic decline when compared to the UK as a whole, which experienced a 20 percentage point fall.
Spending on essential items has increased a record 7% in Scotland compared to the last quarter of 2021, mirroring a trend seen across the rest of the UK. Discretionary spending is also up by 2% quarter-on-quarter.
Deloitte's Consumer Tracker is based on a consumer survey carried out by YouGov with a nationally representative sample of 3,091 consumers in the UK - 257 from Scotland - at the end of March.
It found that 46% of Scottish consumers saw their overall personal expenditure increase in the first quarter of this year, up from 45% in the fourth quarter last year, and 37% in the third quarter.
As with consumers across the UK, those in Scotland are also spending more on transport (up 20%), and everyday household items (up 10%) as well as on phones, internet and TV, up 17% quarter-on-quarter.
The first quarter of the year has seen net consumer confidence fall five percentage points, to -16%, taking its biggest dip since 2020 and undoing the consumer confidence recovery seen since the start of 2021.
With rising household bills, and higher prices at both fuel pumps and grocery checkouts, the latest survey reveals that over half of consumers (52%) are now seeing their overall personal expenditure increase.
The findings on disposable income were the most stark, with a quarter-on-quarter decline of 23%, reaching a record low of -49%.
Céline Fenech, consumer insight lead at Deloitte, commented: “With heightened energy price caps and increased national insurance both since coming into effect, it’s likely we’ll see consumer sentiment on their disposable income decline further in the quarter ahead.”
Just 5% of households with an income of £10,000 and under were able to save in the last quarter, compared to 38% of households with an overall income of £100,000. Lower income households were also more likely to see a decrease in their savings (41%) versus 30% of higher income households.
Consumer sentiment on the state of the UK economy fell a further 20% in the first quarter of 2022, reaching -73%. This is a return to levels last seen in the fourth quarter of 2020; a time when many parts of the UK entered restrictive Covid-19 lockdown tiers.
Ian Stewart, chief economist at Deloitte, commented: “While economic sentiment this quarter has fallen, a number of factors suggest that overall consumer spending will continue to increase, even as real earnings decline.
“Rising employment and higher asset prices are supportive of spending and not all consumers rely on earned income to finance spending.
“However, just because overall spending is rising doesn’t mean that everyone’s is - higher income households are likely to account for a disproportionate share of spending this year.”
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