Consumer Confidence Declines Amid Middle East Tensions
Confidence among UK shoppers has begun to wane due to concerns about the potential economic impact of the US-Israel war with Iran, according to a significant survey.
Research firm GfK reported that its Consumer Confidence Barometer for March reveals increasing uncertainty regarding the UK economy's outlook over the next 12 months. The survey also indicates a reduced willingness among consumers to make major purchases and a heightened interest in saving money.
"A ripple of fear is spreading," said GfK's Neil Bellamy. "People simply do not feel the economy is robust enough to ride out the knock-on effects from the Middle East conflict."
Retail Sales Data Reflects Early Signs of Impact
This development follows data from the Office for National Statistics (ONS) showing a 0.4% decline in retail sales for February, prior to the escalation of the Iran conflict.
The ONS noted that supermarket sales decreased compared to January, while demand for household goods was subdued, partly due to the wet weather experienced in February.
Additionally, non-store retailers, including online and catalogue businesses, experienced a drop in sales volumes. Retailers suggested this was influenced by shoppers advancing their spending to take advantage of January sales promotions.
Although the ONS reported the decline in retail sales as "modest" and below forecasted levels, the decrease in consumer sentiment is viewed as an indicator of potential future trends. Capital Economics UK economist Ashley Webb commented on this outlook.
The drop in ONS retail sales was "modest" and below forecasts, but the fall in consumer sentiment is a "a sign of things to come", Capital Economics UK economist Ashley Webb said.
Consumer Confidence Index Shows Further Decline
The GfK consumer confidence index decreased by two points to minus 21 in March. Expectations regarding the general economic situation over the coming year fell six points to minus 37.
"The decline in GfK consumer confidence in March... is probably the start of a bigger fall and suggests real household spending growth will soften in 2026," Webb said.
