Pensioner anxiety drags consumer confidence to its lowest level in 2024

-Credit: (Image: Reach Publishing Services Limited)
-Credit: (Image: Reach Publishing Services Limited)


A new survey has revealed anxious pensioners have contributed to dragging consumer confidence down to its lowest level this year, as worries over the Budget cast a shadow on household outlooks. According to Which? only one in six consumers believe the economy will improve in the next year, while half expect it to worsen.

A significant 64 per cent of those with a gloomy view blame government tax changes, and 60 per cent are concerned about the change in government. Which? highlighted this concern is "clearly alluded to anticipated spending and tax changes in the upcoming autumn Budget".

From a personal finance standpoint, things look even bleaker, writes City AM, with confidence in future household finances dropping nine percentage points to -15, marking its lowest point since July 2023. The survey indicated that pensioners' pessimism about their financial future was a key driver of the overall decline.

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In September, retirees' confidence in their future household finances plummeted by 19 points, reaching its nadir since December 2022 during the peak of the cost-of-living crisis. Some respondents also cited the government’s recent decision to introduce eligibility criteria for winter fuel payments as a source of their negative outlook. Additionally, the dip in confidence may be reflecting speculated alterations to pension taxes.

It's rumoured that Chancellor Rachel Reeves is poised to unveil several changes to pension tax reliefs in an effort to strengthen public finances. While reports indicate that she has abandoned plans to introduce a flat rate of tax relief on pension contributions, Reeves might still limit the tax-free lump sum and include pension pots in inheritance tax. The survey by Which? adds to mounting evidence that both businesses and households have become more cautious ahead of the Budget, awaiting a new direction in economic policy.

Robert Colvile, director of the Centre for Policy Studies, said it was "not surprising" that sentiment had dipped due to Labour’s pessimistic rhetoric. "Labour have gone to such lengths to spell out how bad the economy is and how much worse it is going to get that by the time the Budget comes, we will probably consider ourselves relieved it wasn’t worse, no matter how bad the announcements are," he stated.

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Meanwhile, Kallum Pickering, chief economist at Peel Hunt, observed that the surveys were in line with several other recent measures of economic sentiment. "There is clear economic evidence that we’ve seen a confidence shock," he said.

However, he suggested that the surveys were likely "slightly overdoing it", noting that there hadn't been a "corresponding drop in activity". "The thing that really matters is the overall growth outlook," he said. "We largely already know most of what will be in the budget on tax and spending, and that’s unlikely to substantially change the outlook, the positive fundamentals are likely to reassert themselves once we are passed the Budget."

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