top of page

Confidence falters

Following a strong rebound in the first half of the year, which resulted in confidence returning to its pre-Covid-19 level in Q2 2021, consumer confidence fell in Q3 2021 for the first time since Q4 2020. The Deloitte Consumer Confidence Index lost one percentage point quarter on quarter to -10% as concerns about personal finances grew.

The confidence index was still significantly higher than the same period a year ago (+7 percentage points) and is now at the same level as in Q3 2019. The fall in the overall confidence index was driven by deteriorating sentiment surrounding debt and disposable income for the second quarter in a row.

Consumers’ confidence about their household levels of disposable income fell by a significant nine percentage points to -21% from -12% in Q2 2021 and is now three percentage points lower than a year ago.

Meanwhile, confidence about levels of debt dropped by two percentage points to -4% compared with the previous quarter and is one percentage point down on a year ago.

While the reopening of the economy drove consumers to spend more, increase their debts and save less, data also points to the rising cost of living and the winding down of government pandemic support schemes as reasons why consumers were more worried about their personal finances.

In a sign of the extra savings made during the lockdown being used up because of rising living costs, more than one in three consumers (36%) say their have seen their overall personal expenditure go up in Q3 2021. In addition, compared with Q2 2021 there was a 16 percentage point increase to 59% in the number of consumers who spent more this quarter because prices were going up. One in ten consumers (12%) have experienced a drop in wages in the last three months and one in four saw a decline in their savings (26%).

The Office for National Statistics (ONS) reported a 20 year record high number of job vacancies which rose to 1.1m in the three months to August, while the average unemployment rate for the period fell to 4.5%, from 4.6% in the previous three-month period. However, the figures also highlighted that the UK workforce is still significantly smaller than it was before the COVID-19 crisis began. As a result, the UK is experiencing shortages of key skills that together with other factors such as unusually strong demand for goods, have contributed to a rapid increase in the rate of inflation pointing to potential interest rate rises.


bottom of page