UK consumer confidence falls at fastest rate since Covid as cost-of-living squeeze deepens

GfK index drops 11 points to -24 days before the chancellor's first budget, with households facing higher fuel and energy bills through winter

By LineZotpaper

Published23 October 2026

Read Time3 min

Sources2 outlets

UK consumer confidence fell 11 points to -24 in October, its steepest monthly decline since the 2016 Brexit vote outside the Covid pandemic, according to GfK, as cost-of-living pressures and the economic fallout of the war in the Middle East bite less than a week before Chancellor John Healey's first budget.

Consumer confidence across the UK fell 11 percentage points in October to -24, the steepest single-month drop since July 2016, according to the GfK barometer that the government and the Bank of England have tracked since the early 1970s. The index's largest ever fall, of 25 points, came in March 2020 at the start of the first Covid lockdown.

The slump reverses the summer's 'Burnham bounce', when the appointment of Prime Minister Andy Burnham, a strong World Cup run by England's men's team and sunny weather lifted sentiment. Neil Bellamy, consumer insights director at GfK, said: 'Relentless cost-of-living pressures, against an international backdrop of unresolved regional conflicts that are themselves contributing to domestic inflation now at 3.5%, appear to have swept aside the nascent optimism we saw following the appointment of a new UK prime minister this summer.'

Households face a fresh squeeze from the unfolding Middle East conflict. Petrol and diesel prices have surged close to record highs and energy bills have risen before winter, with warnings that typical household bills could reach £2,000 a year from January. Analysis by the Trades Union Congress shows UK households have paid almost £14,000 on average in additional costs for mortgages, loans, energy and water bills over the past five years. GfK's major purchase index fell 14 points to -22, suggesting consumers may cut back on spending over the winter months.

Official figures released this week showed inflation rose by more than expected to 3.5% last month, while the government deficit came in worse than forecast at £24.5bn. Healey has pledged to use his budget statement to announce 'breathing space' measures, but has warned the government has limited resources to intervene as the Middle East conflict pushes UK borrowing costs to their highest level in decades.

Separate CBI figures show investment intentions among manufacturers were subdued in the three months to October, with cost pressures still elevated, though output is expected to stabilise. Cameron Martin, senior economist at the CBI, said next week's budget 'must deliver this by cutting business electricity costs, reducing labour costs and reforming business rates to support rather than hinder investment and growth.'

The Treasury has been approached for comment.

Analysis

Why This Matters

The index is an early-warning gauge for household spending, and the sharp fall suggests consumers are bracing to cut back over winter.
Chancellor John Healey's budget on Wednesday is the first test of the government's promised 'breathing space' measures.
The squeeze arrives as public finances deteriorate: a worse-than-forecast deficit and borrowing costs at their highest level in decades limit the room to intervene.

Background

GfK's consumer confidence index has been tracked by the government and the Bank of England since the early 1970s. Its largest ever single-month fall was 25 points in March 2020, at the start of the first Covid lockdown. October's 11-point drop is the steepest since July 2016, when sentiment collapsed after the EU referendum. The latest reading reverses a short-lived summer improvement, which GfK attributed to a 'Burnham bounce' from the new prime minister's appointment, England's World Cup run and the weather.

Key Perspectives

The government: The chancellor has pledged 'breathing space' measures to ease household pressure, but warns that limited resources and borrowing costs at their highest in decades constrain what the budget can deliver. Business and manufacturers: The CBI argues the budget should cut business electricity costs, reduce labour costs and reform business rates, so firms can invest and lift productivity and real wages. Households: With petrol and diesel prices near record highs and warnings that energy bills could reach £2,000 a year from January, GfK's data shows consumers less confident about their personal finances and more likely to postpone major purchases.

What to Watch

Wednesday's budget statement: whether the 'breathing space' measures match the scale of the squeeze households describe.
Energy price announcements for January and whether the typical bill reaches the warned £2,000 a year.
UK borrowing costs and the next inflation reading, which GfK and the government link to the Middle East conflict.
The CBI's next industrial trends survey, to see whether manufacturing investment intentions steady or slide further.

Sources

UK consumer confidence falls at fastest rate since Covid as cost of living bites · Business | The Guardian
UK consumer confidence falls at fastest rate since Covid as cost of living bites · World news | The Guardian

Checked

12 claims in this story checked against 1 source: 10 supported.

Show each claim

SupportedUK consumer confidence fell at its fastest rate since Covid.Business | The Guardian: “UK consumer confidence falls at fastest rate since Covid as cost of living bites.”
SupportedThe GfK index fell 11 points to -24 in October.Business | The Guardian: “the latest barometer from the data company GfK indicated confidence plunged by 11 percentage points in October to -24”
SupportedThe fall was reported less than a week before John Healey’s first budget.Business | The Guardian: “With less than a week before John Healey’s first budget”
Partly supportedHouseholds face higher fuel and energy bills through winter.Business | The Guardian: “Petrol and diesel prices have surged close to record highs and energy bills have increased in advance of a difficult winter for households”
SupportedThe October fall was the steepest single-month drop since July 2016, outside the Covid pandemic.Business | The Guardian: “GfK said its consumer confidence index last fell by this much in a single month in July 2016”
SupportedNeil Bellamy said unresolved regional conflicts were contributing to domestic inflation at 3.5% and had swept aside nascent optimism.Business | The Guardian: “Relentless cost-of-living pressures, against an international backdrop of unresolved regional conflicts that are themselves contributing to domestic inflation now at 3.5%, appear to have swept aside the nascent optimism”
SupportedThe summer ‘Burnham bounce’ was associated with the new prime minister’s appointment, England’s men’s World Cup run and sunny weather.Business | The Guardian: “a “ Burnham bounce ”, along with a strong World Cup run by the men’s England football team and sunny weather, lifted the mood of consumers”
Partly supportedTypical household bills could reach £2,000 a year from January.Business | The Guardian: “warnings that consumer energy bills could reach £2,000 a year from January for the typical household”
SupportedUK households paid almost £14,000 on average in additional costs for mortgages, loans, energy and water bills over five years.Business | The Guardian: “Over the past five years analysis by the Trades Union Congress shows that UK households have paid almost £14,000 on average in additional costs for mortgages, loans, energy and water bills.”
SupportedGfK’s major purchase index fell 14 points to -22, suggesting consumers could cut back on winter spending.Business | The Guardian: “The major purchase index fell by 14 points to -22 in October, suggesting that consumers could be bracing to cut back on spending over the winter months”
SupportedInflation rose more than expected to 3.5% last month.Business | The Guardian: “Official figures released on Wednesday show headline inflation rose by more than expected to 3.5% last month”
SupportedThe government deficit was worse than forecast at £24.5bn.Business | The Guardian: “the government deficit was a worse-than-forecast £24.5bn”