Deloitte: Worsening job security concerns lead to sharp drop in UK consumer confidence for the first time in nearly three years.

A survey released by Deloitte on Monday showed that consumer confidence in the UK has seen a significant decline for the first time in nearly three years, reflecting increased concerns about job security. Deloitte stated that the Consumer Confidence Index in the UK for the second quarter dropped by 2.6 percentage points to 10.4%, the lowest level since the first quarter of 2024. This decline is the first since the third quarter of 2022, when inflation reached double digits and financial markets were unsettled by former Prime Minister Liz Truss's budget plans. Celine Fenech, head of Deloitte's consumer insights department, said, "Concerns about the slowdown in the labor market have made consumers worried about job security and income growth prospects, while persistent high inflation and high living costs have also had a negative impact on attitudes towards personal debt." Businesses are now less willing to hire employees due to three main reasons: increased employment taxes, raising the minimum wage, and potential legal changes aimed at making it harder to dismiss new employees. Official data from last week showed that the UK's unemployment rate rose to 4.7% in the three months to May, the highest level since 2021, and inflation in June rose to 3.6%, the highest level since January 2024. A slightly different picture is painted by Gfk's senior consumer sentiment survey. Gfk's results showed that consumer confidence declined in the second half of last year, but then reached its highest level since December of last year last month. Deloitte's survey of 3200 consumers was conducted from June 13 to June 16, with the Consumer Confidence Index based on six questions about job security, employment opportunities, income, debt, child welfare, and overall health and well-being. Another survey on economic conditions showed an increase of 3.9 percentage points, but still 18.4 percentage points lower than a year ago. Deloitte's Chief Economist Ian Stewart said, "Economic activity in the UK has slowed in recent months, but the rise in business confidence shown in the latest Deloitte CFO survey suggests that the economy remains resilient amidst geopolitical uncertainty."