UK consumer confidence hits record low as recession looms; mini-budget to ‘boost growth’ – business live

Introduction: UK consumers fear for the future as living standards slide

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

Consumers across the UK are the gloomiest on record as the economic picture darkens… as the government announces its plan to kick-start UK economic growth with a flurry of tax cuts that will drive up borrowing.

People are increasingly worried about their personal finances, and anxious that the economy is turning sour, research body GfK warns, a day after the Bank of England said the UK has probably entered recession this quarter.

GfK’s long-running Consumer Confidence Index has fallen another five points this month to a new low of -49.

That’s the worst since records began in 1974, as the tightening squeeze on living costs made people much more pessimistic about their own finances.

In September the GfK UK Consumer Confidence Index fell a further five points to -49, setting a new record low, with data having been collected every month since 1974. pic.twitter.com/20bPQO2Hkk

— David Edwards (@ScattClouds) September 23, 2022

n”,”url”:”https://twitter.com/ScattClouds/status/1573195980866203648″,”id”:”1573195980866203648″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”82cc3028-7c8b-4874-b560-6262c51e3314″}}”>

In September the GfK UK Consumer Confidence Index fell a further five points to -49, setting a new record low, with data having been collected every month since 1974. pic.twitter.com/20bPQO2Hkk

— David Edwards (@ScattClouds) September 23, 2022

This is the fourth new low in five months, as the economy has been battered by rising prices and weakening activity.

Confidence in personal finances over the coming year shed nine points to -40, while confidence in the economy over the next 12 months lost eight points to -68, a really grim reading.

People are also very unwilling to buy big ticket items, as soaring inflation forces households to cut back.

GfK client strategy director Joe Staton said:

“Consumers are buckling under the pressure of the UK’s growing cost-of-living crisis driven by rapidly rising food prices, domestic fuel bills and mortgage payments.

“They are asking themselves when and how the situation will improve.

Kwasi Kwarteng will vow to break the UK’s “cycle of stagnation” today, by lowering the tax burden in a hotly awaited mini budget..

He’s expected to tell MPs that Britain needs a new approach, ‘focused on growth’, by saying:

“Growth is not as high as it needs to be, which has made it harder to pay for public services, requiring taxes to rise.

“This cycle of stagnation has led to the tax burden being forecast to reach the highest levels since the late 1940s.

Even though today’s statement is officially only a ‘fiscal event’, it’s expected to include a 30-point growth package, including scrapping a planned increase in corporation tax from 19% to 25%, plus reforms to the City of London, ending the cap on bankers’ bonuses, and plans to create up 38 new Investment Zones across England.

Yesterday Kwarteng said the national insurance increase introduced earlier this year will be reversed from 6 November.

But economists are warning tht the plan will drive UK borrowing sharply higher, just as government borrowing costs are rising in the bond markets.

The Institute for Fiscal Studies warned this week that Britain’s mounting debts will be unsustainable if the government presses ahead with sweeping tax cuts.

Even once the substantial Energy Price Guarantee has expired in October 2024, borrowing could still run at about £100 billion a year in the mid-2020s.

This is more than £60 billion a year higher than the @OBR_uk forecast in March.

[6/13] pic.twitter.com/iZNk5dKQxw

— Institute for Fiscal Studies (@TheIFS) September 21, 2022

n”,”url”:”https://twitter.com/TheIFS/status/1572632518570004480″,”id”:”1572632518570004480″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”69cf8a6d-4733-404b-aaa5-ee6f31a1b0ef”}}”>

Even once the substantial Energy Price Guarantee has expired in October 2024, borrowing could still run at about £100 billion a year in the mid-2020s.

This is more than £60 billion a year higher than the @OBR_uk forecast in March.

[6/13] pic.twitter.com/iZNk5dKQxw

— Institute for Fiscal Studies (@TheIFS) September 21, 2022

Persistent current budget deficits and rising debt as a share of national income would mean that the two main fiscal targets legislated only in January would be missed.

Even once the Energy Price Guarantee has expired, debt would be left on an ever-increasing path.
[9/13] pic.twitter.com/UuSf6BpXMU

— Institute for Fiscal Studies (@TheIFS) September 21, 2022

n”,”url”:”https://twitter.com/TheIFS/status/1572632526862024704″,”id”:”1572632526862024704″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”95dd4633-6f71-4921-9487-56e03f82d389″}}”>

Persistent current budget deficits and rising debt as a share of national income would mean that the two main fiscal targets legislated only in January would be missed.

Even once the Energy Price Guarantee has expired, debt would be left on an ever-increasing path.
[9/13] pic.twitter.com/UuSf6BpXMU

— Institute for Fiscal Studies (@TheIFS) September 21, 2022

GfK’s Staton points out that today’s mini-budget, and the longer-term agenda to drive the economy, are a major opportunity to improve the economic outlook.

It will also be a major test for the popularity of Liz Truss’s new Government.”

UK Consumers Fear for Their Future as Living Standards Plummet
Low st consumer confidence figures since Gfk started compiling survey in 1970s. https://t.co/eykHu9uNLL

— Louise Cooper (@Louiseaileen70) September 23, 2022

n”,”url”:”https://twitter.com/Louiseaileen70/status/1573195325837303809″,”id”:”1573195325837303809″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”2028a5e9-595a-4f7e-bab9-dd238e8fd5e4″}}”>

UK Consumers Fear for Their Future as Living Standards Plummet
Low st consumer confidence figures since Gfk started compiling survey in 1970s. https://t.co/eykHu9uNLL

— Louise Cooper (@Louiseaileen70) September 23, 2022

We also find out today how manufacturing and services companies in the UK, the US, and across the eurozone, are faring this month – and get a healthcheck on Britain’s retail sector.

Financial markets are subdued, as investors worry that interest rate hikes by central bankers are pushing major economies towards recession.

European Opening Calls:#FTSE 7157 -0.03%#DAX 12531 -0.01%#CAC 5922 +0.06%#AEX 655 -0.35%#MIB 21726 -0.34%#IBEX 7762 -0.16%#OMX 1837 -0.07%#SMI 10290 -0.08%#STOXX 3426 -0.03%#IGOpeningCall

— IGSquawk (@IGSquawk) September 23, 2022

n”,”url”:”https://twitter.com/IGSquawk/status/1573172721978339328″,”id”:”1573172721978339328″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”e5afd9d7-848e-4a0c-94c7-f878cd051cc7″}}”/>

The agenda

9am BST: Eurozone flash PMIs for September
9.30am BST: UK flash PMIs for September
9.30am BST: Chancellor Kwasi Kwarteng presents mini-budget
11am BST: CBI Distributive trends survey of UK retailers

Kwasi Kwarteng will on Friday announce 30 separate measures – including tax cuts, new investment zones and an acceleration of infrastructure projects – in an effort to raise the economy’s growth rate to his stated target of 2.5% a year.

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One of the main elements of the package – the £13bn reversal of the increase in national insurance contributions, introduced in April to fund the health and social care levy – will come into force on 6 November.

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While almost 28 million people will keep more of their earnings as a result of the move, the Resolution Foundation thinktank said on average the poorest 10% of households would gain £11.41 in 2022-23, while the richest 10% of households would gain £682.

“,”elementId”:”47857870-4085-4c71-a371-62be4fd13344″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The mini-budget is expected to contain significant further interventions to boost growth beyond the reversal of the NICs rise and next April’s planned increase in corporation tax, Treasury sources have confirmed, with one Whitehall source describing the package as having “more rabbits than Watership Down”.

One key plank of the fiscal event will be new investment zones for 38 local and mayoral authorities in England – including West Midlands, Tees Valley, Somerset and Hull – which will have major planning deregulation to release more land for housing and commercial development, and tax cuts for businesses.

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Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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GfK’s long-running Consumer Confidence Index has fallen another five points this month to a new low of -49.

“,”elementId”:”16bc0afa-5301-4388-81f3-65e5fbc82cda”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

That’s the worst since records began in 1974, as the tightening squeeze on living costs made people much more pessimistic about their own finances.

“,”elementId”:”9f913b9d-7c47-4105-86e7-9bdd4a9c2efa”},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

In September the GfK UK Consumer Confidence Index fell a further five points to -49, setting a new record low, with data having been collected every month since 1974. pic.twitter.com/20bPQO2Hkk

— David Edwards (@ScattClouds) September 23, 2022

This is the fourth new low in five months, as the economy has been battered by rising prices and weakening activity.

“,”elementId”:”b08a603e-26a0-4e3c-87a1-2deed4baebf1″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Confidence in personal finances over the coming year shed nine points to -40, while confidence in the economy over the next 12 months lost eight points to -68, a really grim reading.

“,”elementId”:”36e99fa0-4c58-4695-b2bb-0ccca0c09f8c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

People are also very unwilling to buy big ticket items, as soaring inflation forces households to cut back.

“,”elementId”:”3202f6f5-a98c-42f6-beee-6ceedab9c5d3″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

GfK client strategy director Joe Staton said:

“,”elementId”:”bc295114-63b6-495d-a4f3-fc63796504c6″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“Consumers are buckling under the pressure of the UK’s growing cost-of-living crisis driven by rapidly rising food prices, domestic fuel bills and mortgage payments.

n

“They are asking themselves when and how the situation will improve.

n

“,”elementId”:”34464b34-5bd4-4177-a0bb-05dbd2113433″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Kwasi Kwarteng will vow to break the UK’s “cycle of stagnation” today, by lowering the tax burden in a hotly awaited mini budget..

“,”elementId”:”c4508da1-2f4b-4433-8701-2dd92f14a1e7″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

He’s expected to tell MPs that Britain needs a new approach, ‘focused on growth’, by saying:

“,”elementId”:”7e08f2e2-90a6-4680-89fb-736b46b0d2da”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“Growth is not as high as it needs to be, which has made it harder to pay for public services, requiring taxes to rise.

n

“This cycle of stagnation has led to the tax burden being forecast to reach the highest levels since the late 1940s.

n

“,”elementId”:”b68a8857-4d69-496a-b7d6-c738c14c71f6″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

“,”elementId”:”451fa28e-e6dc-457f-af9c-c7be5877a5db”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Yesterday Kwarteng said the national insurance increase introduced earlier this year will be reversed from 6 November.

“,”elementId”:”7454f88e-2e53-4673-b746-cf4e2bd97d61″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

But economists are warning tht the plan will drive UK borrowing sharply higher, just as government borrowing costs are rising in the bond markets.

“,”elementId”:”20233bdc-7f01-486a-b2de-700c40560d26″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Institute for Fiscal Studies warned this week that Britain’s mounting debts will be unsustainable if the government presses ahead with sweeping tax cuts.

“,”elementId”:”fcd7d9e6-cfef-446c-a336-39213dd2d716″},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

Even once the substantial Energy Price Guarantee has expired in October 2024, borrowing could still run at about £100 billion a year in the mid-2020s.

This is more than £60 billion a year higher than the @OBR_uk forecast in March.

[6/13] pic.twitter.com/iZNk5dKQxw

— Institute for Fiscal Studies (@TheIFS) September 21, 2022

Persistent current budget deficits and rising debt as a share of national income would mean that the two main fiscal targets legislated only in January would be missed.

Even once the Energy Price Guarantee has expired, debt would be left on an ever-increasing path.
[9/13] pic.twitter.com/UuSf6BpXMU

— Institute for Fiscal Studies (@TheIFS) September 21, 2022

GfK’s Staton points out that today’s mini-budget, and the longer-term agenda to drive the economy, are a major opportunity to improve the economic outlook.

“,”elementId”:”3aa93e5a-a38c-4ca6-930b-b7660eb95678″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

It will also be a major test for the popularity of Liz Truss’s new Government.”

n

“,”elementId”:”6ba0c1db-373c-434b-af28-22bdc812ef99″},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

UK Consumers Fear for Their Future as Living Standards Plummet
Low st consumer confidence figures since Gfk started compiling survey in 1970s. https://t.co/eykHu9uNLL

— Louise Cooper (@Louiseaileen70) September 23, 2022

We also find out today how manufacturing and services companies in the UK, the US, and across the eurozone, are faring this month – and get a healthcheck on Britain’s retail sector.

“,”elementId”:”dba08a28-0950-4a59-bb98-5c8b014b6f6b”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Financial markets are subdued, as investors worry that interest rate hikes by central bankers are pushing major economies towards recession.

“,”elementId”:”0a2c1ea7-ad1c-4bc1-9841-922a1585feae”},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

European Opening Calls:#FTSE 7157 -0.03%#DAX 12531 -0.01%#CAC 5922 +0.06%#AEX 655 -0.35%#MIB 21726 -0.34%#IBEX 7762 -0.16%#OMX 1837 -0.07%#SMI 10290 -0.08%#STOXX 3426 -0.03%#IGOpeningCall

— IGSquawk (@IGSquawk) September 23, 2022

The agenda

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9am BST: Eurozone flash PMIs for September

9.30am BST: UK flash PMIs for September

9.30am BST: Chancellor Kwasi Kwarteng presents mini-budget

11am BST: CBI Distributive trends survey of UK retailers

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Key events