Autumn chill hits UK economy: Why government policies are fuelling consumer pessimism
20 September 2024, 14:44 | Updated: 20 September 2024, 14:46
As warmer weather gives way to more dreary and colder autumn days, the confidence in the UK economy is also becoming gloomier.
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The Gfk Consumer Confidence Barometer fell by 7 points to -20, its lowest level since January this year. This showed that people in the United Kingdom are increasingly concerned about their personal finances and broader economic prospects.
This decline in consumer confidence is entirely unsurprising if we consider the recent statements and actions by the government about the economy. The government refused to scrap the two-child benefit cap, and the Labour Party even punished the MPs who voted to get rid of it.
The government scrapped winter fuel payment support for all but the poorest pensioners, taking away the £200-300 support from 9.4 million individual pensioners, with an additional 780,000 eligible pensioners expected to miss out on the support as they are unlikely to claim it.
At the same time, Ofgem has approved an increase in the energy price cap, setting the stage for average electricity and gas bills to go up to £1,717 a year, an increase of £149. The Prime Minister has also not ruled out scrapping the 25% single person council tax discount.
The Labour government has repeatedly told us that things will get worse, and its statements have indicated that the burden of the “tough” measures needed will be borne by regular people in the United Kingdom, all while the profits of big corporations have soared, as has the wealth of billionaires in the UK.
After about a decade and a half of austerity policies under the previous Conservative governments, regular people in the UK seem to have no respite under the new Labour Government. The government must take bold measures not just to raise tax revenue (which we largely expect) but also to announce new investment projects that are sorely needed to kickstart the economy.
This is necessary to end the doom loop the economy is in and give people hope that better days lie ahead. Without it, this pain and pessimism is likely to continue.
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Devika Dutt is an economist at the University of Kings College London.
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