Consumer confidence in the UK crashed in March to its lowest level since the financial crisis as government measures to prevent the spread of coronavirus fuelled fears over personal finances and the health of the economy, according to a closely watched survey.
The consumer confidence index compiled by GfK, the research house, plummeted from minus 7 in February to minus 34 at the end of March.
This score, which was recorded after Boris Johnson’s introduction of a nationwide lockdown to slow the spread of Covid-19, was just shy of the index’s record low of minus 39 in July 2008.
The reading also marks a sharp contraction from the minus 9 recorded in the middle of March, before the prime minister ordered the closure of all non-essential shops and told people to stay at home.
The GfK survey of 2,000 people aged over 16 between March 16 and 27 shows “consumer confidence falling off the cliff”, said Joe Staton, the research house’s client strategy director.
“The last time we saw such a decline was during the 2008 economic downturn,” he added. “Our falling confidence in our personal financial situation and the wider economy reflects the new concern for many across the UK.”
People responding to the GfK survey were increasingly concerned about their personal financial situation for the coming year, with the score dropping from 6 in February to minus 17 at the end of March.
The reading is calculated by taking the proportion of survey respondents reporting improving conditions, and subtracting those recording a deterioration.
“It is clear that many consumers are worried about their jobs and income, and of course many people have already lost their jobs,” said Howard Archer, adviser at the EY Item Club, the economic forecasting group.
He added this was despite chancellor Rishi Sunak and the Bank of England unveiling measures to help companies and workers get through the Covid-19 crisis.
Last week, the Department for Work and Pensions said almost 1m people had applied for universal credit, the welfare benefit, since March 16, nearly 10 times the usual number.
People responding to the GfK survey were also increasingly concerned about the general economic situation over the coming year, with the score dropping from minus 21 in February to minus 56 at the end of March.
GfK’s main purchase index, which is based on whether people think it is the right time to buy items such as electrical goods or furniture, plunged from 6 in February to minus 52 at the end of March.
Economists warned that the decline in buying intentions was particularly worrying as it signalled that, with shops closed, consumers might prefer to cancel big purchases altogether rather than do online shopping.