UK Consumer Confidence Slumps as Debt Worries Mount; Bad Weather Threatens Fruit Supplies
Consumer confidence in the United Kingdom has fallen to its lowest level in two years, underscoring mounting anxiety among households over debts, savings and future financial prospects.
A new survey from S&P Global found that Britain’s Consumer Sentiment Index registered 44.8 in February. While slightly higher than January’s 44.6 reading, the figure remains well below the neutral 50 mark that signals improving confidence — and sits among the weakest levels recorded in the past two years.
The index, running since 2009, paints a picture of households growing more uneasy even as some business surveys suggest corporate optimism has improved since the start of the year.
S&P analysts described the public mood as “dismal,” noting that persistent wet weather has done little to lift spirits already weighed down by financial strain.
Debt and Uncertainty Weigh on Households
The survey suggests consumer spending remains subdued, with many Britons concerned about mounting debts and dwindling savings buffers.
The findings contrast with recent corporate sentiment data, which has pointed to rising business optimism following clarity around the government’s autumn budget. For households, however, relief appears elusive.
Rising borrowing costs over the past two years have left many families navigating higher mortgage payments and tighter credit conditions. While inflation has cooled from its peak, its aftereffects continue to ripple through household finances.
The fragile consumer mood also casts a shadow over the broader economy, where household spending remains a key growth driver.
Markets Eye Falling Bond Yields
Amid the economic unease, analysts at Goldman Sachs predicted that UK government borrowing costs could ease significantly by the end of the year.
George Cole, a Goldman economist, forecast that the yield on 10-year UK government bonds — known as gilts — could fall to 4% by late 2026, down from around 4.4% currently.
While political uncertainty has kept a “risk premium” embedded in bond markets, Cole argued that declining macroeconomic volatility, easing inflationary pressures and the prospect of further interest rate cuts from the Bank of England should help drive yields lower over time.
Still, upcoming local elections could prolong short-term volatility.
In equity markets, London’s FTSE 100 edged modestly higher, with defense stocks leading gains following reports that the government may accelerate plans to raise defense spending to 3% of GDP. Analysts noted that while increased public investment can stimulate growth — particularly through capital spending and supply chains — the benefits depend heavily on how such expansion is financed.
Weather Disruptions Ripple Through Food Markets
Beyond Britain’s financial anxieties, unusual weather patterns are reshaping agricultural outlooks across Europe and North Africa.
Heavy rains and volatile conditions threaten fruit supplies in parts of Europe, raising concerns about potential shortages and price pressures later in the year. By contrast, Morocco’s wheat crop is expected to benefit from improved rainfall, potentially boosting production after previous drought-stricken seasons.
The divergent impacts highlight the growing influence of climate variability on food supply chains, with localized gains offset by broader regional challenges.
Mixed Signals Abroad
Elsewhere, Japan and Switzerland have both managed to avoid slipping into recession, offering some resilience in the global outlook. Israel, meanwhile, recorded an acceleration in economic growth last year.
Back in the UK, average asking prices for homes were broadly flat last month, signaling a property market still adjusting to higher borrowing costs.
For British households, however, macroeconomic developments offer limited comfort. The sentiment survey suggests that everyday concerns — from credit card balances to mortgage repayments — are shaping perceptions more than abstract indicators.
If confidence remains mired below the 50-point threshold, policymakers may face increasing pressure to support consumers directly. For now, the prevailing mood appears cautious at best — and, as S&P noted, as grey as the weather that has defined much of the year so far.
