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03:09

Introduction: UK consumer confidence shaken by cost of living

Hello and welcome to our live coverage of business, economics and financial markets.

The cost of living crisis has sent British consumer confidence plummeting to its lowest level since the pandemic, as rising food and energy bills hammer families.

There has been a “significant and sustained decline in consumer confidence”, resulting in the largest one-year drop in confidence since the global financial crisis, according to a new report from PwC this morning.

Its UK consumer confidence index fell to -20 this month, from +10 last summer. That’s barely above the -26 recorded at the start of the pandemic two years ago.

Cost of living crisis hammers UK consumer confidence as inflation bites – business live |  Business
UK consumer confidence Photography: PwC

PwC warns that this dramatic drop shows the impact of the cost of living crisis across the UK.

Lisa Hooker, Industry leader for consumer markets, PwC UKsaid:

“This change in sentiment is both significant and sudden, with consumer expectations for spending shifting towards more essential areas at the expense of discretionary items. Companies that help their customers by offering discount options are more likely to to stay faithful when things get better.”

The 30-point drop over the past nine months is the biggest sustained drop in PwC’s survey since the 2008 global financial crisis, as households face the biggest squeeze in decades.

Energy bills have just soared, and could start again in October, while food price inflation is the fastest in 10 years.

More details to follow…..

Also coming today

Eurozone finance ministers will discuss the impact of the war in Ukraine on European economies when they hold a Eurogroup meeting today, as pressure mounts for a ban on Russian gas imports.

They will also discuss how a digital euro could be designed and the trade-offs between privacy and the prevention of money laundering, illicit financing and tax evasion.

European stock markets opened slightly higher, despite concerns about rising inflation, slowing growth and the impact of war in Ukraine.

Agenda

  • 7am BST: German trade balance for February
  • 10.05am BST: Andrew Bailey, Governor of the Bank of England: speech at the Stop Scams conference
  • From 2 p.m. BST: meeting of the Eurogroup of finance ministers of the euro zone in Luxembourg.
  • 3:00 p.m. BST: Speech by Deputy Governor of the Bank of England, Sir Jon Cunliffe, at a seminar of the European Economic and Financial Center
  • 3:00 p.m. BST: US factory orders for February

03:27
Cost of living crisis hammers UK consumer confidence as inflation bites – business live |  Business
Photograph: Matt Alexander/PA

EasyJet canceled more than 200 flights over the weekend as rising Covid-19 infections led to increased staff absences.

The disruption is expected to last until this week, leaving some passengers stranded in travel chaos at some of Britain’s biggest airports.

The airline blamed the problems on high levels of illness among employees caused by Covid, with at least 222 trips axed since Friday.

He said he had made efforts to make up for staffing shortages by signing up an additional reserve team at the weekend, but had been forced to make “additional cancellations for [Sunday] and [Monday]”.

A total of 62 flights scheduled for Monday have been withdrawn, most of which were announced at short notice on Saturday.

An easyJet spokesperson said:

“Due to the current high rates of Covid infections across Europe, like all businesses, easyJet is experiencing higher levels of employee illness than usual.

“We have made 62 pre-emptive cancellations of flights to and from the UK for [Monday] which represents a small proportion of [Monday’s] total flight schedule which was to be over 1,645 flights. We have canceled the majority of these [on Saturday].”

03:21

UK consumers are cutting back on discretionary spending as rising food bills leave them with less money for others

Spending expectations for dining out, going out, vacations and fashion spending have all fallen this year, according to PwC’s Consumer Confidence Report.

Cost of living crisis hammers UK consumer confidence as inflation bites – business live |  Business
PwC consumer confidence Photography: PwC

Groceries is now the only category with net positive spending intention; almost exclusively due to inflation expectations.

PwC says:

Expectations for spending on eating out and going out have plummeted; these are now the lowest categories as consumers look for ways to cut spending. Restaurant dining, in particular, has seen an excellent post-lockdown rebound, with the Coffer CGA Business Tracker showing high single-digit like-for-like growth in restaurant chain sales from 2019 throughout the fall and at the start of 2022. The only exceptions to this rule were at the height of Omicron and work-from-home guidelines issued in December 2021 and January 2022.

Other discretionary spending is expected to be hit hard, with holiday and fashion spending intentions also seeing substantial declines since last spring. Pent-up demand and weak comparisons may mean both categories should see double-digit growth from 2021, but neither is expected to hit pre-pandemic highs.

03:17

Consumers are bracing for prices to continue to climb in the months ahead.

Three-quarters of people surveyed by PwC last month have seen their groceries become more expensive in recent months, and 78% expect prices to rise further in the coming months.

It’s a similar picture with utilities – two-thirds were already spending more, with 77% expecting further rises. Only 4% of all consumers do not expect to increase their spending on groceries, utilities or gas in the coming months.

Cost of living crisis hammers UK consumer confidence as inflation bites – business live |  Business
Photography: PwC

UK inflation hit a 30-year high of 6.2% in February and is expected to rise more than 8% this month due to last Friday’s rise in the energy price cap.

03:09

Introduction: UK consumer confidence shaken by cost of living

Hello and welcome to our live coverage of business, economics and financial markets.

The cost of living crisis has sent British consumer confidence plummeting to its lowest level since the pandemic, as rising food and energy bills hammer families.

There has been a “significant and sustained decline in consumer confidence”, resulting in the largest one-year drop in confidence since the global financial crisis, according to a new report from PwC this morning.

Its UK consumer confidence index fell to -20 this month, from +10 last summer. That’s barely above the -26 recorded at the start of the pandemic two years ago.

Cost of living crisis hammers UK consumer confidence as inflation bites – business live |  Business
UK consumer confidence Photography: PwC

PwC warns that this dramatic drop shows the impact of the cost of living crisis across the UK.

Lisa Hooker, Industry leader for consumer markets, PwC UKsaid:

“This change in sentiment is both significant and sudden, with consumer expectations for spending shifting towards more essential areas at the expense of discretionary items. Companies that help their customers by offering discount options are more likely to to stay faithful when things get better.”

The 30-point drop over the past nine months is the biggest sustained drop in PwC’s survey since the 2008 global financial crisis, as households face the biggest squeeze in decades.

Energy bills have just soared, and could start again in October, while food price inflation is the fastest in 10 years.

More details to follow…..

Also coming today

Eurozone finance ministers will discuss the impact of the war in Ukraine on European economies when they hold a Eurogroup meeting today, as pressure mounts for a ban on Russian gas imports.

They will also discuss how a digital euro could be designed and the trade-offs between privacy and the prevention of money laundering, illicit financing and tax evasion.

European stock markets opened slightly higher, despite concerns about rising inflation, slowing growth and the impact of war in Ukraine.

Agenda

  • 7am BST: German trade balance for February
  • 10.05am BST: Andrew Bailey, Governor of the Bank of England: speech at the Stop Scams conference
  • From 2 p.m. BST: meeting of the Eurogroup of finance ministers of the euro zone in Luxembourg.
  • 3:00 p.m. BST: Speech by Deputy Governor of the Bank of England, Sir Jon Cunliffe, at a seminar of the European Economic and Financial Center
  • 3:00 p.m. BST: US factory orders for February



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