UK (Parliament Politics Magazine) – A KPMG survey reveals rising economic pessimism in the UK, leading consumers to spend less and save for financial hardships.
As reported by The Guardian, ahead of Chancellor Rachel Reeves’s spring statement, a survey reveals consumers are reducing spending on essentials due to declining confidence in the British economy.
What did the KPMG survey reveal about the UK economy?
KPMG research reveals growing concerns among Britons about the economy’s direction before the chancellor’s plan to announce major cuts.
A survey of 3,000 UK consumers found that 58% felt the economy deteriorated in the three months leading up to February. This marks a 15-point increase from the previous quarter.
It shows that 43% of consumers are cutting back on everyday expenses. Meanwhile, over a third are increasing their savings, while 29% are delaying major purchases.
According to a KPMG survey, financial insecurity is rising from 21% to 24% in the UK. The findings show that 15% are cutting non-essential spending, while 2% are relying on debt to cover bills.
What did Linda Ellett say about consumer spending?
Linda Ellett, head of consumer, retail, and leisure at KPMG UK, stated that increasing concerns over the economy are pushing some financially secure households to scale back their spending.
She stated,
“Some may be taking this action as they prepare for higher costs, such as a new mortgage deal or the higher cost of travel. But other cautious consumers are certainly preparing for the potential impact on them from what they believe to be a worsening economy.”
Ms Ellett added,
“This week’s spring statement needs to give people confidence in the longer-term UK economic outlook.”
What did the YouGov survey reveal about Britain’s public finances?
A recent YouGov survey conducted before the Spring Statement finds 80% of Britons view the nation’s public finances as struggling, including 34% who described them as “very bad.”
Only 3% of respondents believe the government is in a strong financial position, whereas 13% view the situation as neutral, neither good nor bad.
Briton’s views about government spending and tax policies
A YouGov poll revealed that 27% of Britons support increasing government spending, with backing rising to 38% among Labour voters. Meanwhile, 31% believe spending should remain unchanged.
Labour has reaffirmed its manifesto promise to keep income tax, national insurance, and VAT unchanged. Polling data indicates that 18% of Britons back tax hikes in Labour’s financial approach. However, the majority remains divided, with 34% supporting keeping taxes steady and 33% advocating for tax cuts.
What Did Britons Say About Immigration and Welfare?
The survey reveals that 16% of Britons favour limiting immigration or cutting spending directed at asylum seekers and migrants.
A significant 45% of Reform UK voters and 25% of Tories prioritized this as their top concern, making it the most frequently mentioned issue.
It also suggests that 7% back welfare cuts, 5% support reducing foreign aid, and 5% prioritize cutting waste.
What will Rachel Reeves announce about spending cuts?
Rachel Reeves plans to reveal the most significant spending cuts since austerity on Wednesday’s Spring Statement, opting against tax hikes to address the budget deficit.
The chancellor will announce major Whitehall budget cuts, with some government departments facing reductions of up to 7%.
What did Whitehall sources say about government cuts?
One Whitehall source stated,
“The government has been clear that departments will have to find more efficiencies. That is why Wes Streeting [the health secretary] has cut NHS England, that is why Liz Kendall [the work and pensions secretary] has made reductions to welfare payments.”
Another insider said,
“I don’t know how much longer we can go on pretending this is not austerity, when the reality is we’re making cuts to vital public services such as police and prisons.”
What did Ben Zaranko say about public service cuts?
Ben Zaranko from the Institute for Fiscal Studies (IFS), stated,
“The government will be hoping that the short-term cash injection provided last year, and efficiency improvements as public services continue to recover from the pandemic, will be enough to deliver service improvements even if money is tight.”
He added,
“But we’re in a very different world to 2010 and, even though the pace of cuts would be substantially slower than in the peak austerity years, it would still represent the steepest cuts since 2019.”