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Economy
May 11, 2026
Analyzed by GPT OSS 120B

UK Households Brace for New Cost‑of‑Living Crisis as Confidence Plummets

AI Summary
A PwC survey shows UK consumer confidence falling to a record low of -13 in April, with almost 90% of households worried about rising costs. Inflation has risen to 3.3% and job vacancies are falling, signalling a broader economic strain linked to the Middle East conflict.

British households are bracing for a renewed cost‑of‑living squeeze as confidence in the economy hits its lowest level since autumn 2023, according to a new PwC survey.

Survey Shows Sharp Drop in UK Consumer Confidence

The quarterly PwC survey, which tracks spending intentions and perceived financial health, recorded a confidence score of -13 in April, down from -1 in January. The score is the lowest since autumn 2023 and mirrors a rapid three‑month dip—the fastest since June 2022.

Numbers Reveal Deepening Financial Strain

  • Almost 90% of the 2,068 respondents said they were concerned about the cost of living.
  • 80% plan to cut back spending in the next three months.
  • Those who intend to drive less to save on fuel rose from 12% to 24% since January.
  • Inflation measured by the CPI rose to 3.3% in March, up from 3% in February, above the Bank of England’s 2% target.
  • Job vacancies fell for the 30th consecutive month, while permanent staff appointments dropped sharply in April.

Confidence about household finances fell across all age groups, with a 20% decline in the share of under‑35s feeling financially healthy and a 9% rise in those reporting bill‑paying difficulties.

Broader Economic Implications Amid Middle East Conflict

The dip in confidence coincides with heightened uncertainty from the ongoing Middle East war, which the Bank of England says will make higher inflation “unavoidable” by pushing up fuel, food and energy prices. Parallel surveys from GfK and US data show similar confidence slumps, underscoring a global ripple effect.

Consumer‑facing sectors such as hospitality are hoping the summer World Cup will provide a temporary boost, while the jet‑fuel crisis may spur domestic staycations as international flights become cost‑prohibitive.

What the Future May Hold for UK Households

Analysts expect sentiment to worsen before any relief, as energy and food costs remain elevated. If inflation stays above the Bank’s target, further monetary tightening could be delayed, leaving households to rely on behavioural adjustments—reduced travel, lower discretionary spend, and greater use of flexible work arrangements.

Policymakers will need to balance inflation control with targeted support for the most vulnerable groups to prevent a deeper plunge in consumer spending and employment.