Overview
British consumer confidence weakened in April to its lowest point since mid-2023, according to two independent surveys released on Monday. The data highlight rising consumer unease about household finances and employment prospects, and point to broader pressure from energy price increases linked to recent conflict in the Middle East.
Survey findings
Data company S&P Global reported that its consumer sentiment index declined to 42.3 in April from 44.1 the prior month, marking a 33-month low. Accountants Deloitte said its quarterly confidence gauge fell to its weakest reading since the third quarter of 2023. Both organisations identified deteriorating views among households on their finances and on job security.
Geopolitical backdrop and market reaction
Both surveys attributed part of the deterioration to the fallout from conflict in the Middle East. The reports noted that inflation in Britain already sits at the top of the Group of Seven economies and that investors see the UK as particularly vulnerable to the spike in energy prices that followed U.S.-Israeli attacks on Iran which began at the end of February. That energy-price fallout is seen as a factor pushing inflation expectations and borrowing costs higher.
Escalation risks
Concerns increased on Monday that the temporary pause in hostilities between the United States and Iran could unravel after the U.S. said it had seized an Iranian cargo ship that tried to run its blockade, and Iran stated it would retaliate. The potential for renewed escalation has contributed to sentiment deterioration recorded in the surveys.
Household finances and labour market
"Many consumers were already facing a squeeze on their household budgets at the start of the year with the slowing of wage growth and a cooling jobs market," said Celine Fenech, consumer insight lead at Deloitte UK. "For consumer sentiment and spending to improve, households will want to see a more certain outlook for the economy."
S&P Global also reported that more than half of households expect the Bank of England will raise interest rates further, a sentiment that feeds into expectations about mortgages and consumer borrowing. Bank of England Governor Andrew Bailey had warned earlier in the month that investors may be getting ahead of themselves by pricing in further rate moves.
Housing market signals
The housing market showed signs of slowing. Online property portal Rightmove reported that asking prices for British homes rose by 0.8% month-on-month in April, described as a smaller-than-usual increase for a month that often sees higher activity. Rightmove property expert Colleen Babcock noted that mortgage rates remain elevated due to the war in Iran and that price growth has been strongest in higher-end segments of the market while areas more exposed to borrowing costs have seen slower momentum.
Implications
Taken together, the surveys point to a consumer sector under strain from squeezed household budgets, uncertain labour conditions and higher interest-rate expectations driven in part by energy-price developments linked to geopolitical tensions. The combination of these forces has contributed to the weakest consumer morale readings since mid-2023.