Three in five people say that the UK economy is worsening, leading even consumers feeling financially secure to cut back on spending, according to the latest quarterly Consumer Pulse survey from KPMG in the UK.
The number of people feeling that the UK economy is worsening grew by fifteen percentage points in the last three months to 58%. But despite the perception of a downbeat economic picture, the majority (55%) of people currently feel financially secure (which is just 2 percentage points lower than the previous quarter).
The research gauged the confidence of 3000 UK consumers and assessed their buying behaviour over the last quarter (December – February).
Those feeling insecure about their finances grew from 21% to 24% over the last three months, but within that only 15% of people reported that their finances are such that they are having to actively cut discretionary spend to pay for essentials – with a further 2% saying they are incurring debt to pay bills.
The growing negative economic perception is leading more consumers to take spending action than those who say their financial situation means they need to, with:
- 43% saying they are reducing spend on everyday items.
- 36% saying they are saving more as a contingency.
- 29% saying they are deferring big ticket purchases.
- 19% feeling less inclined to leave their current employment.
Reflecting upon the findings, Linda Ellett, head of consumer, retail and leisure for KPMG UK, said: “Our research continues to show that while only a minority of consumers feel financially insecure, the majority feel that the economy is heading in the wrong direction. And this nervousness about the economy is leading many, including some of those who are secure in their current personal financial circumstances, to cut everyday spend, defer big ticket buying, and save more.
“Some may be taking this action as they prepare for higher costs, such as a new mortgage deal or the higher cost of travel. But other cautious consumers are certainly preparing for the potential impact on them from what they believe to be a worsening economy. This week’s Spring Statement needs to give people the confidence in the longer-term UK economic outlook.”
Quarter to quarter spending:
Comparing consumer spending in the first quarter of 2025[1] to the results from the final quarter of 2024:
- Eating out remains the most common target (38%) for those cutting spend. Takeaway was second, with 34% of consumers reporting less spend over the last three months. The number of people saying they are cutting back was 2 percentage points higher than the last survey.
- The number of consumers reporting they cut clothing and footwear spend in the last three months rose 3 percentage points from the last survey to 32%.
Cost cutting behaviour when shopping was once again evident, with:
- Nearly a quarter of consumers (23%) saying they shopped for promotional or discount goods more in the last three months.
- Just over a fifth (22%) of consumers saying they bought more own brand or value goods in the last three months.
- A fifth (21%) of consumers saying they used loyalty schemes more this quarter.
- 70% of consumers said that price was a top purchasing driver for everyday items – rising 3 percentage points from the last survey.
Holiday spend was again the most common ‘big ticket’ quarterly spend, with 21% of consumers reporting related spend in the last three months. 30% of consumers say they will spend on a holiday in next three months.
45% of consumers said they bought no ‘big ticket’ items in December, January and February. And 38% said they won’t make any larger purchases in the coming three months.
[1] The Consumer Pulse tracks Q1 from December 2024 to February 2025, and Q4 2024 tracks September-November 2024.
