Consumers are losing confidence in the UK’s economic prospects and considering tightening purse strings and saving money in the coming months, shows recent data.
Amid widespread warnings that businesses may have to cut staff and raise prices because of impending tax and wage rises, GfK’s long-running Consumer Confidence Index fell by five points to -22 in January – its lowest reading since since December 2023.
Neil Bellamy, Consumer Insights Director at NIQ GfK, noted that there were particularly steep falls in consumer views on the wider UK economy, both looking back a year and at what’s in store for the next 12 months.
“These figures underline that consumers are losing confidence in the UK’s economic prospects,” he said.
“While the Savings Index on motivation to save money is not included in the calculation of the Overall Index Score, it’s notable that it has leapt nine points in January to +30.
"This sharp increase is unwelcome because it’s another sign that people see dark days ahead and are therefore thinking of putting money aside for safety.”
Growth in the UK economy has slowed to a crawl in recent months, with the Bank of England now widely expected to cut interest rates on 6th February.
Separate data released recently showed that there has been an “unprecedented” rise in the number of businesses on the brink of insolvency.
The Red Flag Alert report by Begbies Traynor showed that the number of firms in critical financial distress rose by 50 per cent in the three months to December compared to June-August. It said that 46,583 businesses were clinging on, with consumer-facing firms, such as hospitality businesses, bearing the brunt of the deterioration.
The report pointed to pressures on many fronts, from rising energy costs, budget tax measures, high interest rates and weak consumer demand.
Julie Palmer, partner at Begbies Traynor, commented: “Across nearly every sector, there has been an unprecedented level of growth in the number of firms who are at serious risk of entering insolvency in the next 12 months.
"The fact that the distress is being felt across almost every corner of the economy highlights how difficult the outlook is for UK businesses right now.
“After a disappointing Christmas, consumer-facing industries, in particular, are feeling the strain, with rising operational costs and higher wages adding to an already difficult situation.
"With many such businesses already operating on thin margins, I fear the current situation will undoubtedly push some over the edge.
“Indeed, at a time when consumer confidence is so volatile and borrowing costs look likely to be structurally higher for the foreseeable future, the situation feels very precarious.
“Sadly, this has only been exacerbated by the tax rises and increase in national minimum wage levied on businesses during the October 2024 UK budget, which means the financial strain on businesses will only increase later this year.”
A good majority of Brits likes to support small businesses all the year round, shows a recent survey, suggesting affection for the UK’s small businesses remains strong.
According to a recent from American Express based on the survey of 2,000 adults, two-thirds (63 per cent) of consumers believe it is important to support small independent businesses all year round, and not just during seasonal peaks like Small Business Saturday, which in 2024 saw a collective £634m spent in-store and online.
Consumers highlighted various reasons why they would continue shopping small, including how these businesses boost the appeal of their local high street (53 per cent); the personalised experience they enjoy when shopping (50 per cent); and a desire to support their local community (43 per cent).
Brits will be taking an increasingly savvy approach to their spending, the research found.
Half (50 per cent) of all respondents say they will buy from alternative retailers if they feel they can get a better deal elsewhere, with a third (33 per cent) stating they would be encouraged to do so by specific offers.
Shoppers plan to lean into ways of achieving greater value for money this year, compared to last; buying pre-loved items, maximising seasonal sales, and using payment cards that offer rewards and points on their purchases were among the top ranked tactics.
Furthermore, Gen Z and Millennial shoppers ranked as the most thorough when it comes to their research before spending, particularly if planning to purchase big ticket items like furniture. Almost three quarters (73 per cent) of this age group said they either always or sometimes seek recommendations in advance.
Dan Edelman, UK general manager, merchant services at American Express, said, “The one guarantee with retail is that it never stands still, and it’s the retailers who best meet ever-evolving customer expectations that will succeed.
"Our research identifies some distinct priorities that are likely to influence consumer spending behaviour in the months ahead.
“For small businesses, it’s hugely positive to see continued recognition of, and affinity for, shopping small highlighted by the research.
"Small businesses pride themselves on the unique experiences and service they offer, something that clearly appeals to consumers.”
Small businesses are "18 times less likely" to offer an apprenticeship scheme as compared to large businesses, a recent report has claimed, adding that some small businesses are not taking proactive steps to recruit apprentices from lower socioeconomic backgrounds.
Co-op in a report released on Monday (10) points out how more than a third (38 per cent) of school leavers face a lack of apprenticeship opportunities in their local area.
Co-op finds that two in three (68 per cent) school leavers agree that apprenticeships are more important now than in previous years, with almost half (48 per cent) seeing an apprenticeship as the most beneficial way of entering the world of work.
However, despite those from lower socioeconomic backgrounds being more likely to apply for an apprenticeship (73 per cent v 66 per cent), many are facing barriers to accessing apprenticeships.
Co-op’s research also included a survey of business leaders, which found that seven in ten agree that a socioeconomic gap exists when it comes to hiring apprentices. It also finds that small businesses are 18 times less likely to offer an apprenticeship scheme compared to large businesses.
Amongst those that do, one in five small businesses are not taking proactive steps to recruit apprentices from lower socioeconomic backgrounds.
The top reasons for this lack of proactive recruitment include: a lack of time and resources (38 per cent), uncertainty about how to access diverse talent pools (33 per cent), insufficient funding to support apprenticeship programmes (29 per cent), and concerns over increased training costs (14 per cent).
Furthermore, businesses in less advantaged areas lack higher level apprenticeship schemes, with only a quarter (26 per cent) of business leaders in these areas offering level six or seven apprenticeships, states the report.
Claire Costello, Co-op’s Chief People and Inclusion Officer, says, “The research paints a picture of the real and widespread relationship between an individual’s socioeconomic background and their unequal access to apprenticeship opportunities post-school.
"There has never been a more important time for the Government and UK businesses to stand up to reality and do more to ensure access to apprenticeships is fair and equitable for all young people.
"Someone’s background should not limit their career potential which is why we’re calling on an amendment to the IfATE Bill - to level the playing field so everyone can have a fair shot at reaching their full potential.”
The research comes as Co-op has written to the Education Secretary calling on the Government to give Skills England a statutory duty to improve social mobility across the country.
January sales kicked off a solid month for retail with stores delivering their strongest growth in almost two years, shows industry report released today (11).
According to retail body British Retail Consortium (BRC), UK total retail sales increased by 2.6 per cent year on year in January, against a growth of 1.2 per cent in January 2024. This was above the 3-month average growth of 1.1 per cent and above the 12-month average growth of 0.8 per cent.
Food sales increased by 2.8 per cent year on year in January, against a growth of 6.1 per cent in January 2024. This was above the 3-month average growth of 2.3 per cent and below the 12-month average growth of 3 per cent, shows BRC report.
Commenting on the figures, Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said, “January sales kicked off a solid month for retail with stores delivering their strongest growth in almost two years, albeit on a weak comparable.
"Consumers headed to the shops to refresh their homes for the year ahead, taking advantage of big discounts on furniture, bedding and other home accessories.
"With growth across nearly all categories, only toys and baby equipment remained in decline. While the bouts of stormy weather put a temporary dampener on demand, sales growth held up well throughout the rest of the month. This was also helped by the earlier start of the reporting period, adding a few more post-Christmas shopping days into the mix.
“Whether this strong performance can hold out for the coming months is yet to be seen. Inflationary pressures are rising, compounded by £7bn of new costs facing retailers, including higher employer national insurance contributions, higher National Living Wage, and a new packaging levy.
"Many businesses will be left with little choice but to increase prices, and cut investment in jobs and stores. Government can mitigate this by ensuring its proposed business rates reforms do not result in any shop paying more in business rates.”
Commenting on food and drink sector performance, Sarah Bradbury, CEO of IGD, said, "The current climate of economic uncertainty is reflected in IGD’s January shopper confidence index, which has declined by 3 points.
"With unemployment at 4.4 per cent (+0.4 per cent vs this time last year), shoppers have responded by employing strategies to control their spend.
"The notable increase in volume over value sales suggests a shift towards private label products and a change in purchasing categories, as shoppers anticipate further price rises for food and drink.”
High streets need to optimise for midweek office workers as Brits return to office, as shown by latest data on footfall, suggesting areas of focus for retailers such as extending trading hours in the evening and paying attention on grab-and-go meals.
According to the latest data from retail tech specialist MRI Software, retail footfall bucked seasonal trends in January, rising +1.4 per cent year on year across all UK retail destinations,
This marks the first annual increase in January footfall since 2016 (+1.2 per cent), outside of the pandemic period, suggesting that a stronger return to office work is driving retail visits as businesses push employees back to in-person work.
As expected, post-holiday footfall dropped sharply month on month, falling by almost -20 per cent across all UK retail destinations.
The decline was most pronounced in the second week of January, coinciding with schools and offices reopening, exacerbated by heavy snowfall and widespread travel disruptions.
High streets bore the steepest decline, with footfall plunging -22.4 per cent from December to January, followed by shopping centres at -21.7 per cent, while retail parks fared slightly better with a -16.5 per cent decline.
However, the shift back to office-based work was evident throughout January.
Weekday footfall rose by +1.6 per cent year on year, while weekend footfall dropped by -3.5 per cent, underscoring the growing weekday retail opportunity.
MRI Software’s Central London Back to Office benchmark showed a +1.4 per cent annual footfall increase, largely driven by a +4.4 per cent uplift during early evening hours (17:00-20:00). The trend suggests that after-work activity is picking up, offering retailers an opportunity to tap into office workers' midweek spending habits.
Data from MRI Software’s Consumer Pulse report reveals that evening shopping (post-5PM) is now the most common time for office workers to visit retail destinations, with 34 per cent preferring to shop after work.
Tuesdays, Wednesdays, and Thursdays see the highest overlap between office attendance and retail activity, with 58 per cent of respondents working in the office on Tuesdays and aligning shopping trips for midweek convenience.
Additionally, 31 per cent of respondents reported visiting high streets during lunch hours—more than any other retail destination—highlighting the importance of proximity and convenience for office workers on their break.
Customer habits of snacking and alcohol consumption are expected to see a major shift in the coming years with growing evidence that weight loss medication users show little interest in snacking, consuming alcohol, or even eating between meals, a recent report has stated.
This was one of the key messages from ‘The 2025 Show’, a virtual event hosted by MMR Research, where top industry voices unpacked what’s coming next for brands and product innovation.
According to event host Andrew Wardlaw, Chief Ideas Officer at MMR Research, GLP-1 medications appear to work in two ways- physically, by lowering blood sugar, delaying gastric emptying, and in some cases, creating feelings of nausea. And neurologically, by interfering with the brain’s reward systems.
“In effect, GLP-1 medications are shutting down desire,” Wardlaw said.
The event featured several real-world consumer experiences, where users shared stories of dramatic reductions in daily cravings.
With the food and beverage industry at risk from the rising incidence of GLP-1 households, Wardlaw highlighted the importance of maximising curiosity at the shelf to mitigate the effects of this unprecedented assault on impulsive behaviour.
Lori Herman, insights leader at Mondelez, North America, acknowledged the impact of GLP-1 medications on the food and beverage.
She said, “You need to eat a lot of protein apparently when you are utilising this medication, and I feel like that’s going to benefit brands that are inherently protein rich. I think we will see the emergence of even more protein-rich snacks come into the market as a result.”
Herman added, “So, I do think it will impact the types of products we are seeing as it potentially becomes a little bit more mainstream.”
The event further covered the importance of new and novel experiences among consumers.
Pointing to recent research by MMR Research across key economic regions, Wardlaw urged manufacturers to escalate innovation that champions new flavours, new pack formats, extreme and unexpected sensory profiles, and product experiences that have the potential to go viral.
“We know that conversations about new and novel experiences are rising dramatically – up 23% in posts involving food and drink in the last 12 months, for example”, Wardlaw claimed.
Interactions with over 3000 consumers showed that people are interested in discovering new products and experiences to break the monotony of everyday life, adding daily glimmers – often FOMO fuelled by platforms such as TikTok.
Wardlaw concluded: “Beyond industry yardsticks such as ‘liking’ and ‘overall appeal’ lies a complex network of emotional needs.
"We know that people are often drawn to brands and products because they make them feel adventurous, socially connected, discerning, and so on.
"These motivations have little to do with ‘liking’ and everything to do with identity and aspiration. Increasing our efforts on building superior emotional outcomes will help manufacturers mitigate the risks that GLP-1.
“We think brands can still market irresistible products, but via a different kind of reward system.”