Consumer confidence in Britain has experienced its steepest decline in over a decade, according to data released in October. The latest figures from the market research firm GfK show an 11-point drop in the consumer sentiment index between September and October, bringing the overall score to minus 24. This level of pessimism has not been seen since the period following the 2016 Brexit referendum, aside from the pandemic months.

The survey, conducted in the two weeks leading up to October 14, indicates a sharp erosion of household optimism about personal finances and the broader economy. Neil Bellamy, consumer insights director at GfK, described the decline as an “extraordinary collapse,” emphasizing that the speed and scale of the downturn were particularly concerning given the government’s focus on fostering economic growth.

The fall in confidence comes amid ongoing cost-of-living pressures exacerbated by elevated global energy prices. Brent crude oil recently reached a five-month high of $112.68 per barrel, contributing to increased fuel and household energy costs. Inflation, which had eased in recent months, rose slightly to 3.5 percent in October—the highest in nearly a year—and is expected to climb further in the coming months. Wage growth, meanwhile, has remained subdued, with average salaries increasing by just 4.5 percent annually, marking the slowest pace since 2021.

Households reported particular reluctance to make major purchases, such as appliances and furniture, with intentions to spend on big-ticket items falling sharply alongside concerns about the economy’s future. This downturn has effectively erased the modest improvements in consumer mood observed during the summer following the appointment of Prime Minister Andy Burnham’s government in July. The timing of the data, shortly before Chancellor John Healey’s upcoming Budget, presents a challenge for the administration as it seeks to deliver cost-of-living relief.

Despite the gloomy consumer sentiment, official economic indicators present a mixed picture. The UK economy continues to perform relatively well compared with other G7 nations this year. Labour market data show unemployment at its lowest point this year, 4.7 percent, while job vacancies, though declining to a 12-year low excluding pandemic anomalies, remain significant. However, nearly three-quarters of firms surveyed by the British Chambers of Commerce reported difficulties recruiting staff in the third quarter, with the construction sector particularly affected.

Industry groups have called on the government to reconsider policy measures that affect employment costs, specifically the rise in employers’ national insurance contributions implemented by Chancellor Rachel Reeves in 2024. Employers and business representatives argue that reducing these contributions for younger workers could lower hiring costs, help address youth unemployment, and encourage investment in skills development.

In summary, while Britain’s economy shows resilience in some areas, the sharp drop in consumer confidence underscores mounting household concerns about inflation, energy prices, and economic prospects, intensifying pressure on the government ahead of the forthcoming Budget.