Consumer confidence drops again – global tensions add to consumer doom

Emeritus Professor Joe Nellis is economic adviser at MHA, the accountancy and advisory firm.

The latest reading from GfK delivers an uncomfortable message. UK consumer confidence is sliding further. The index has fallen to -25 points in April, down from -21 in March. This slide reinforces the sense that households remain deeply uneasy about the outlook.

This is not just a routine wobble. It shows a public that is increasingly cautious about their finances and the wider economy. At these levels, pessimism is firmly in control. Many households are not expecting improvement soon. That mindset is shaping behaviour.

Confidence matters because it feeds directly into spending decisions.

Approximately two-thirds of economic activity in the UK is driven by household spending on a wide range of goods and services – food, energy, travel, leisure, and big-ticket items such as cars and furniture. Small shifts in consumer behaviour can therefore have a disproportionate impact on growth. When uncertainty rises, consumers pull back. Major purchases are delayed, discretionary spending is trimmed, and saving becomes a priority. This quickly feeds through to weaker demand, leaving businesses with slower sales and a more challenging trading environment.

What is keeping confidence so subdued is the accumulation of pressures rather than any single shock. The cost-of-living squeeze has left a lasting mark, while higher borrowing costs continue to weigh on households. On top of this, ongoing geopolitical tensions are playing an increasingly important role. The instability in the Middle East is pushing up energy prices and fuelling concerns about renewed inflation. Even for households not directly affected, the constant flow of global uncertainty is eroding confidence and reinforcing a sense that risks are rising rather than receding.

The danger is that this becomes self-sustaining. A cautious consumer slows the economy, and a weaker economy in turn undermines confidence still further.

The message is clear: until both domestic pressures ease and global risks settle, the UK consumer will remain on the defensive – and the economy will struggle to shift out of low gear.

Among its UK locations, accountancy and advisory firm MHA has offices in Aberdeen and Edinburgh.