Household confidence in the United Kingdom has fallen to its lowest level since the cost-of-living crisis in 2023, with workers expressing increasing anxiety about job security, according to findings from S&P Global's UK consumer sentiment index for August.
The index reading of 42.9 for August represents a dip from July's four-month high of 43.4, indicating a continued trend of declining consumer optimism. The average level of consumer confidence for 2026 so far is the lowest recorded in three years.
This downturn poses a challenge to Prime Minister Andy Burnham's stated goals of providing households with greater financial relief through early policies targeting energy bills and bus fares. The latest figures suggest that workers' concerns about job stability are a significant factor contributing to this gloom.
Employment income has also seen a decline for the first time in over three years, according to the index. This trend exacerbates broader concerns about household finances, which consumers anticipate will remain under pressure for the coming year. The S&P Global survey of 1,500 households found that debt and the depletion of savings are increasingly weighing on sentiment, with demand for additional borrowing rising as savings are depleted more rapidly.
These findings emerge against a backdrop of economic resilience, with official figures showing GDP growth of 0.6% in the first quarter and 0.4% in the second quarter of 2026. However, consumer perceptions appear to be diverging from these broader economic indicators.
Maryam Baluch, economist at S&P Global Market Intelligence, noted that job insecurity is at its highest in nearly three and a half years. She added that incomes have fallen for the first time since April 2023, further impacting consumer sentiment.
Economists have also raised concerns that the current government may implement further tax increases to fund its spending pledges, which include plans for increased housebuilding, social care reform, and defense spending. Such measures, economists warn, could add to the tax burdens already imposed under previous administrations. There are also claims that existing policies, such as employer National Insurance contributions and minimum wage hikes, are already contributing to job losses. Since the general election, unemployment has reportedly risen from 4.1% to 4.9%, with over 300,000 individuals added to the unemployment figures. Young people, aged 16 to 24, appear to be disproportionately affected, with over a million in this age group classified as not in employment, education, or training. A recent poll by the Chartered Institute of Personnel and Development indicated that only 57% of private sector employers plan to recruit in the next three months, a post-pandemic low.