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Consumer confidence in the United Kingdom has decreased sharply in January to its lowest level in more than a year, as the significant increase in government borrowing costs and warnings of reducing jobs on economic morale affected.

The consumer confidence index – GFK – a measure of how people see their personal financial resources and their wider economic prospects – decreased by 5 points to negative 22, the lowest reading since the end of 2023, according to new data.

Consumer confidence provides an aspirational measure of the spending of families – the most pessimistic morale means that people are more inclined to savings instead of making great purchases. Families built great savings in the past year, which limited the spending recovery, although wage growth for inflation has exceeded 2024.

The monthly decrease in the GFK Consumer Index was the largest since September 2024, when consumers were concerned about potential tax increases in the October budget.

Neil Pelami, Niq GFK, referred to a special decrease in confidence in the UK’s wider economy. He said: “These figures confirm that consumers lose confidence in the economic prospects of the United Kingdom.”

The poll was conducted in the first half of January, when the cost of borrowing in the United Kingdom increased for a period of 10 years to the highest level since the financial crisis, threatening the government’s ability to meet its financial rules and increase the risk of more tax increases.

The costs of borrowing have declined since then a A sudden decrease in inflation in the United Kingdom in December But it remains higher than it was in the fall.

Business polls also highlighted in early January Low employment expectationsPartially driven by the upcoming increase in the national insurance contributions for employers, which are scheduled to enter into force in April.

The confidence was less than the expectations of the economists whose Reuters had listed the negative views of 18, but it was in line with the expectations of Eli Henderson, the economist at the Investment Bank of Investment.

Henderson said that the news about the high costs of borrowing and the loss of potential jobs “may have negatively affected the perceptions and expectations regarding the economy and family finance.”

Thomas Villadic, chief European economist at the investment company T Ro Price, said consumers have become “increasingly worried about job opportunities.”

The savings index, the GFK, which does not enter into the account of the total confidence index, jumped 9 points to the plus 30. Bilami described this increase as “unwanted” because it indicates that families are preparing for difficult economic times by giving priority to savings on spending.

The saving of families in the United Kingdom, the unprotected income percentage, was 10.1 percent in the three months until September, which is much higher than an average of 5.5 in the 2016-2019 period, according to official statistics. Despite the rise in real wages for more than a year and a half, the per capita family consumption remained 2.2% less than its levels in the last quarter of 2019, before the pandemic.

But Henderson claimed that when confidence is recovered, savings that exceed 10% and health growth of wages can transform consumption.

“If confidence rises, consumers in general have the means to unleash a higher level of consumption,” Henderson said. “This confidence will recover soon, even though it is less certain,” she added.

The ability to withstand housing costs improved, according to separate data published on Friday. And it showed that despite his remaining average in the long term, the price ratio to the profits for buyers first decreased to 5 at the end of last year from a peak of 5.8 in 2022. Likewise, the mortgage premiums for buyers first decreased to 36. A percent of their home salaries, from a peak of 38 percent at the end of 2023.