UK household confidence fell to its lowest level since 2023 in August as growing job insecurity and falling incomes hit worker sentiment, S&P Global figures showed yesterday.
The S&P Global UK consumer sentiment index dropped to 42.9 in August, down from a four-month high of 43.4 recorded in July.
The decline brings the average level of consumer confidence in 2026 so far to its lowest point in three years, delivering a blow to expectations of a "Burnham bounce" under Prime Minister Andy Burnham.
Burnham, who leads the Labour government, has pledged to provide households with more "breathing room" regarding the cost of living through early policies aimed at lowering energy bills and bus fares.
The sharp drop in sentiment reflects growing anxiety among workers over employment security, with employment income falling for the first time in more than three years, since April 2023.
During the 2023 cost-of-living crisis, British households faced severe financial pressure driven by rampant inflation after Russia invaded Ukraine, causing global oil prices to surge.
The current downturn is increasingly driven by employment concerns, according to the poll of 1,500 households. The survey found that consumers expect their personal finances "to remain under pressure" over the coming year.
Job insecurity and falling household income
Maryam Baluch, an economist at S&P Global Market Intelligence, said: "Job insecurity is now at its highest in nearly three and a half years, with incomes falling for the first time since April 2023."
Baluch added: "Debt and the depletion of savings also weighed increasingly on household sentiment in August. Demand for additional borrowing picked up as households reported a faster erosion of their savings."
The weakening sentiment comes despite official economic statistics showing that the UK economy made a robust start to the year. Gross domestic product (GDP), which measures total economic output, grew by 0.6 per cent in the first quarter and 0.4 per cent in the second quarter.
However, household financial worries persist alongside widespread fears that Prime Minister Andy Burnham and Chancellor of the Exchequer John Healey could introduce further tax increases.
Fears of tax increases and Labour spending pledges
Economists warned last week that the Labour administration could raise taxes by up to £25billion to fund the prime minister's policy pledges.
Burnham's key spending commitments include plans to increase housebuilding, overhaul the social care system, and raise national defence spending.
Any new tax raid would come on top of £75billion in tax increases previously introduced under former Prime Minister Keir Starmer and former Chancellor Rachel Reeves.
Critics blame Labour's economic policies, including an increase in employer National Insurance contributions and steep hikes to the national minimum wage, for triggering job losses across the UK economy.
Rising unemployment and employer hiring slowdown
Unemployment across the UK has risen from 4.1 per cent to 4.9 per cent since the general election, adding more than 300,000 people to the dole queue.
Young people have been hit hardest by the weakening labour market, with more than one million individuals aged 16 to 24 now classified as not in employment, education, or training (NEET).
A separate survey published yesterday by the Chartered Institute of Personnel and Development (CIPD), the professional body for human resources, showed that only 57 per cent of private sector employers plan to recruit over the next three months, matching a post-pandemic low.
