Consumer confidence in the UK has fallen to the lowest level for more than a year amid concern that Donald Trump’s trade wars could further drive up living costs for British households.
The latest barometer of sentiment from the data company GfK fell in April to its lowest level since November 2023, as a combination of domestic tax increases, rising bills, and worries over the US president’s tariffs weighed on consumers.
The consumer confidence index, which the government and the Bank of England have closely monitored for early warning signs from the economy since the early 1970s, fell by four points to -23.
Neil Bellamy, the consumer insights director at GfK, said that consumers had not only been grappling with “multiple April cost increases” in the form of utility bills, council tax, stamp duty and road tax, but were also “hearing dire warnings of renewed high inflation on the back of the Trump tariffs”.
The increasingly erratic approach of the US president, who is less than 100 days into his second term, has rattled the world economy as his tariffs threaten to wreck international supply chains in a major negative shock.
Economists warn that Trump’s tariffs on goods imported to the US will lead to a significant slowdown in global growth and come with a cost for American consumers by pushing up prices. US consumer confidence levels have fallen sharply in recent weeks.
The inflationary impact outside the US is not as clear because exports from US trading partners could be rerouted elsewhere, and a glut of goods arriving in those places could cause prices to fall.
However, growing numbers of companies are warning that the disruption to supply chains could force them to put up prices, while consumer inflation expectations are also rising.
According to the latest snapshot from GfK, the measure of UK consumer expectations for the general economic situation over the next 12 months fell by eight points to -37, a significantly worse reading than in April 2024.
The forecast for personal finances over the next 12 months also slipped by four points to -3, which is five points worse than this time last year.
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Falling confidence levels can foreshadow weakness in consumer spending as households tighten their belts in response to worries over the outlook for their financial situation, particularly when it comes to big-ticket purchases.
Inflation in the UK has fallen back from a peak of 11.1% in late 2022. While it now stands at 2.6%, the Bank of England expects a rise to 3.7% this summer before slowly falling back to its 2% target over the next two years.
Bellamy questioned whether Britain was “on the verge of another round of rapidly increasing prices” on the back of Trump’s tariffs.
“If so, consumer confidence is likely to collapse, and the broad gains seen since the disastrous September 2022 mini-budget – when confidence hit a record low of -49 – could quickly be eroded.”
