Rachel Reeves risks talking down the economy with her gloom on the economy and the public finances, as the British Retail Consortium revealed a sharp drop in consumer confidence this month.
Consumers’ assessment of the state of the economy and their personal finances dropped in September compared to August, the industry group said, amid the Chancellor’s warnings of “tough decisions” and Sir Keir Starmer’s promise of a “painful” Budget to come next month.
Helen Dickinson, chief executive of the BRC, said the warnings are so severe that consumers have become increasingly fearful.
“Retailers could face a turbulent few months as consumer confidence fell significantly in September. Negative publicity surrounding the state of the UK’s finances appears to have damaged confidence in the economic outlook, particularly among older generations,” she said.
“Despite this, expectations for future retail spending, while negative, did not yet appear to have been adversely affected, with many consumers expecting to reduce the amount they save instead.”
That impact on older generations comes after the Government announced most pensioners will no longer receive winter fuel payments, a benefit worth at least £200 each year to help with the cost of keeping homes warm.
The decision to restrict the payments was condemned by Labour members who voted at the party’s conference to oppose the fuel raid.
Ms Dickinson called on the Chancellor to cut business rates to encourage investment and job creation.
“The Budget is a key opportunity to inject some confidence back into the economy, boosting spending and helping to foster much needed investment by businesses,” she said.
A HM Treasury spokesman said: “The Chancellor has been clear that the prize for bringing stability to our economy is creating conditions for businesses to invest and for consumers to spend with more money in their pockets. That is the Britain we are building and next month’s Budget will be about delivering on the promise of change.”
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