UK Consumer Confidence Suffers "Brexit-Level" Collapse: 11-Point Plunge in October, Holiday Retail Sounds the Alarm

UK consumer confidence plunged in October, with soaring fuel prices making households acutely feel the cost-of-living shock from the Middle East conflict. GfK said its consumer confidence index fell to -24, down 11 points from September. Excluding the pandemic period, this is the largest drop since the UK's 2016 referendum on EU membership. The decline wiped out all the improvement in UK consumer confidence achieved over the summer after Andy Burnham became prime minister and quickly announced help for households struggling with rising bills. His chancellor, John Healey, is expected to announce further measures in next week's budget. "The speed of this deterioration is alarming," said Neil Bellamy, head of consumer insights at GfK. He added that consumers are currently bearing "relentless cost-of-living pressures, with the international backdrop being unresolved regional conflicts." The survey was conducted from October 1 to 14, during which the spillover effects of the Iran war began to tighten household budgets. Diesel prices broke through 2 ($2.7) per liter for the first time, and households began to accept the reality that energy bills could rise by 25% in January. Key mortgage rates approached 6%, and Bank of England officials hinted that the first rate hike in more than three years could come as early as November. The GfK report contrasts with signs of resilience in the broader economy, suggesting that businesses are currently bearing the main supporting role rather than consumers. Healey sought to minimize talk of tax increases ahead of the October 28 budget to avoid another pullback in consumer spending. He said, "Past speculation has already caused real damage." This month's confidence decline is comparable to that after the Brexit referendum. All confidence measures tracked by GfK fell. Plans for major purchases dropped sharply, a worrying signal for retailers ahead of the key holiday shopping season. Willingness to save, which is not included in the overall confidence score, rose. Confidence deteriorated across all income groups. High-income consumersthe only group still able to spend beyond essentialssaw the largest decline, with confidence falling 20 points to -7 in October. An earlier survey by the British Retail Consortium showed that households expect the economy to worsen over the next three months. "No single major economic event drove this decline, and the weakness spans all income, age and gender groups; given that the UK government's priority is economic growth, these findings are damaging," Bellamy said.