Almost half of UK households are struggling with the cost of everyday essentials, shows new survey, highlighting how Iran war has led to a surge in pessimism in the UK.
The escalating conflict in the Middle East, which has driven the price of oil, gas, crop fertiliser and other raw materials sharply higher, threatens to cause another cost of living shock.
According to the latest Consumer Insight Tracker by Which?, 49 per cent of households are being forced to dip into savings, sell possessions, or take other measures to cover these costs.
The survey found that confidence in the future of the UK economy plummeted by 13 points to minus 56 in the month to March 13, the lowest level recorded since the end of 2022.
Which? said this score reflected “a deep-seated pessimism across the country”, with two-thirds (67 per cent) of UK adults now expecting the national economy to worsen over the next 12 months, while just 12 per cent think it will improve.
Confidence has not yet reached the depths of the pandemic, when the score hit -78, or the 2022 cost of living crisis, when it fell to -70, but the drop highlights a growing strain as millions of households continue to struggle.
Savings are shifting from a safety net to a lifeline, with a quarter (26 per cent) of households now regularly dipping into savings to bridge the gap between their income and the cost of essentials. This contrasts with the end of last year when financial stress appeared to be declining.
Confidence in the future of household finances has hit its lowest level since April last year, falling five points to -15 this month.
Sue Davies, the head of consumer protection policy at Which?, said, “Our research shows a concerning shift in consumer sentiment, with confidence in the economy hitting its lowest point in years as households face a daunting combination of rising prices and global instability.
“Pressure on budgets is becoming unsustainable for many. We would encourage anyone who is struggling to keep up with their bills to speak to their providers as soon as possible and seek free, independent debt advice.”