UK households have cut back on big purchases like holidays and cars as the possibility of a recession looms, according to a new market survey.
IHS Markit, which tracks perceptions of financial well-being, found consumer confidence has fallen to its lowest point in three months – dropping from 44.3 last month to 43.7 in August.
A confidence index score of below 50 indicates a relatively bleak outlook for the future.
Further, the figures also reveal that the appetite for major purchases has fallen at the second fastest rate since September 2017.
Concerns over Brexit and the possibility of a coming recession mean that households are also increasingly pessimistic about job security, with survey results showing the strongest degree of negativity since March.
Income from employment has risen, but the rate of growth narrowed to its weakest level for five months.
The latest GDP figures showed that the economy shrank slightly in the second quarter of the year, stoking fears about a possible recession.
Joe Hayes, an economist at IHS Markit, said: “Latest survey data continued to highlight a fragile state among UK households towards their financial well-being.
“The Brexit haze, uncertainty over the political environment and the increased possibility of the UK entering recession appear to have dented expectations, which dipped into negative territory following positive readings in both June and July.”
Umbrella Insolvency’s Licensed Insolvency Practitioner Tom Fox said: “Although wages are increasing faster than inflation, consumer confidence is still pegged back due to uncertainty.
“After one quarter of negative growth earlier this year, the UK entering recession is a real possibility. This could have a tumultuous effect on the economy ahead of the Autumn Brexit deadline and personal and business finances could be turned upside down before the year is out.”
Are you struggling with personal or business debt? Speak to a member of the Umbrella Insolvency team for advice. Call: 0800 611 8888.