UK Consumer Confidence Plummets to Two-Year Low Amid Mounting Debt Fears
A stark new survey has revealed that consumer confidence in the United Kingdom has slumped to its lowest level in two years, with households describing their financial mood as "dismal" amid rising debts and persistent economic pressures.
Gloomy Sentiment Mirrors the Weather
The UK Consumer Sentiment Index, compiled by S&P Global, registered a reading of 44.8 in February. Any figure below 50 indicates a deterioration in consumer optimism, and this month's score, while a marginal improvement from January's 44.6, remains among the weakest recorded since early 2023.
Economist Maryam Baluch of S&P Global Market Intelligence noted that the pervasive pessimism "matches the dismal weather seen so far this year," adding that the prolonged period of rain and lack of sunshine has "not helped to lift the low spirits seen among households."
Debt Accumulation and Credit Crunch
However, the report stresses that the issues run far deeper than mere meteorological gloom. Households are accumulating debt at the fastest pace since July, with a particular surge among 18- to 24-year-olds. Alarmingly, the need for credit is being met with the steepest decline in loan availability since August 2024.
"Households are growing increasingly worried about debt in particular," Baluch explained. All age groups except those aged 18 to 34 reported increased debt burdens, but the youngest demographic is facing the sharpest rise.
Youth Unemployment and Policy Concerns
This financial strain coincides with troubling employment data. Official figures show the unemployment rate for 18- to 24-year-olds is at its highest since 2020. Bank of England rate-setter Catherine Mann has suggested that government policies pushing up the minimum wage for this age group may have "manifested in unemployment" for younger workers.
Regional Pessimism and Spending Retreat
The survey found households are more pessimistic about their financial prospects for the coming year than they were in January. Every region and nation of the UK recorded declines in savings and available cash, with the most severe drops seen in the East Midlands, Northern Ireland, and Yorkshire.
Consequently, the appetite for making major purchases has slipped to a 10-month low, driven by a lack of confidence in future finances and mounting debt worries. Baluch warned, "The low appetite to spend bodes ill for the broader impetus to purchase, hinting at a sustained drag on economic growth from sluggish consumer spending in the first quarter."
Contrast with Business Optimism
This consumer gloom stands in sharp contrast to recent business surveys, which have indicated a rise in corporate optimism since the start of the year, following the resolution of uncertainty around the government's autumn budget.
The S&P report arrives just a day before the release of official UK employment and wage figures for the final quarter of 2025. Unemployment is forecast to hold steady at 5.1%, while annual growth in average earnings is expected to have slowed to 4.2% from 4.5% in the previous period.
This comprehensive data paints a concerning picture of a UK consumer base under significant financial strain, with debt, unemployment fears, and a pervasive lack of confidence combining to create a formidable headwind for economic recovery.
