Market research firm GfK said its consumer confidence index for the UK in May fell to its lowest level since records began in 1974 amid the cost of living crisis which is making rage in the country.
The May result, down two points from April at minus 40, is one point below the previous record set in July 2008, when the overall score plunged to minus 39, Xinhua news agency quoted Joe Staton, director of client strategy at GfK, as saying on Friday.
“This means consumer confidence is now weaker than in the darkest days of the global banking crisis, Brexit’s impact on the economy or the Covid shutdown,” he added.
Staton says it comes as UK unemployment hits 50-year low, vacancies outnumber first-time job seekers, and inflation hits 40-year high , driven by soaring food and fuel bills.
The consumer price index in the UK increased by 9.0% in the 12 months to April 2022, from 7.0% in March.
The country’s central bank expected inflation to continue rising for the rest of the year, reaching just over 9% in the second quarter (Q2) and averaging just over 10% at its peak. at T4.
With prices soaring, UK households have felt the pressure.
In April, the Scottish Widows’ Household Finance Index showed household savings in the UK fell at the fastest rate in nine years in the first quarter of this year amid the fastest reduction liquidity availability since the last quarter of 2013.
In the midst of the crisis, the poorest have borne the brunt. While everyone is being hit by the biggest squeeze on household incomes in half a century, low-income households are facing the toughest time, said the Resolution Foundation, a think tank.
UK charity Citizens Advice noted that by mid-May it had helped more than 750 people every day by referring them to food banks, and in the first third of the year it had seen more than cases of people unable to recharge their prepaid meter than in the whole of 2021 combined.
A report by professional services network Deloitte showed that half of Gen Z (generation born between 1997 and 2012) and Millennials use all of their monthly income for the cost of living, while two in five took a little struggling to make ends meet.
To cut costs for millions of households, Chancellor Rishi Sunak announced in March that the government would raise the income threshold for people to start paying National Insurance from around 3,000 pounds ($3,740) to 12 570 pounds in July.
It’s a £6billion tax cut for 30 million people across the country and a tax cut for employees worth more than £330 a year, according to Sunak .
In addition, this year all domestic electricity customers will receive an initial reduction on their bills worth £200. Energy suppliers will apply the discount to household bills from October.
In April, the government also introduced a council tax rebate of 150 pounds to reduce the cost of energy, which will benefit around 80% of all households in the country.
Problems with government aid have already emerged. UK charity National Energy Action has pointed out that the country’s poorest households are struggling to get their £150 council tax back on energy.
While those who pay by direct debit should receive the money automatically, those who pay by other means or who are exempt from council tax must apply for it.
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