
Consumer sentiment has fallen again. And this time everything has got a little bit worse across the board. With people’s finances now matching the ‘vibecession’ they were feeling in our Autumn consumer sentiment survey, all the usual indicators are down - it’s the first time we’ve seen this simultaneous trend since the 2022 mini budget.
Our latest consumer sentiment survey shows confidence is down from -8 at the start of 2025 to -12 at the end of March. Sentiment is now at its lowest since September 2023 and is the worst sentiment of the new government, with every demographic and socioeconomic group showing a decline compared with this time last year, except 25-34 year olds.
We’ve seen the biggest falls among the young (under 25) and families (35-54) and a renewed widening polarisation between demographic and socioeconomic groups. Perhaps surprisingly, 25-34s are now the most optimistic age group, thanks to stronger household and personal finances.
While we’ve seen some of these trends and indicators before, unlike earlier declines - such as in Autumn 2024 - this is due to more than just how individuals feel. Household finances are worse than last year and there is greater concern over both personal and national economic situations. Since the beginning of 2025, worries over the economy, geopolitics and inflation have increased, even before recent events concerning global trade tariffs. The full impact of this remains to be seen in our next consumer sentiment survey. This uncertainty has driven consumer spending intentions lower, and consumer cutbacks higher. For the first time since 2022, category spending intentions have worsened and short-term spending cutbacks increased.
Elsewhere, there are concerns about job security affecting a minority of people, which is further worsened among the young and lower skilled workers, particularly those who are most likely to be affected by the fallout from April’s National Insurance Contribution and National Living Wage changes.
“Thinking about your disposable income in the next 12 months, do you think your household will be...?”
Since January, sentiment has worsened across all demographic groups except the 25-34s and the most affluent.
Over our last few surveys, the polarisation between the top and bottom groups had been shrinking. It's now starting to widen again, which is often an indicator of tough times. Among the broader sentiment declines, the 25 to 34-year-old demographic surprisingly bucks the trend, exhibiting a more optimistic outlook. This group appears to benefit more broadly from recent government policies favouring working individuals, such as employee National Insurance rate cuts and more stable job prospects. Their rising spending intentions across both non-discretionary and discretionary categories reflect their likely improved household finances.
Household finances have also deteriorated from their end of 2024 high, and are now worse than this time last year. It’s a trend worsening most noticeably amongst older and less affluent consumers.
Balance of opinion by age group
Those aged 65 and over have seen another drop in ‘healthy finances’ - i.e. having enough left at the end of the month for luxuries or savings - although they remain above the UK average.
Historically, retirees were by far the most positive in terms of healthy household financial situation, with one in two having had money left at the end of the month. That's fallen off, with little difference between them and the 25-34 year olds. It now seems that the 25-34s are the biggest beneficiaries of the government’s economic decisions. Most other age groups and socioeconomic groups are now in a worse position than they were before, apart from the most affluent. These wealthier segments are better positioned to absorb economic shocks compared to less affluent groups.
Proportion of adults concerned about these issues over the next 12 months
Just after Christmas, we began asking consumers about various personal and national concerns, to understand how they might affect their spending intentions in the future. We then asked again for the Spring. Just as after Christmas, consumers were most concerned about the economy, inflation and global events. These were weighing on people’s minds even before the US tariffs were announced.
Looking at a direct comparison with our Christmas data, virtually everything is getting worse in consumers' minds. This could go some way to explaining why sentiment has dropped. Interestingly, however, people seem to be slightly more positive about mortgage repayments as interest rates have eased. It might not be a surprise but it does offer some relief.
Elsewhere we're starting to see a slight increase in concern about job prospects. Although job security concerns are less widespread, they grew particularly amongst younger and less skilled workers. The biggest increases are among the under 35s, especially in the under 25s and the least affluent, who are all the individuals more likely to be affected by the impact of new regulations on their employers. Whether it’s the impact of National Living Wage increases or changes to the National Insurance threshold, job cuts in retail and leisure have become concentrated in younger people or entry level jobs largely because they have become more expensive to employ.
Over two thirds (70%) of consumers are now expecting to reduce spending in the next three months, a slight increase on our previous survey. This is the first time in two and a half years we’ve seen an increase in cutbacks compared against the most recent data. While the change is small, it’s indicative of a general trend.
The intention to cut back has increased across all categories, too. And not only has the proportion of consumers planning short-term spending cutbacks increased, but so has the average number of cutbacks planned: from 3.8 per person at the start of the year, to 4.2 cutbacks in the latest survey. This incremental tightening across all areas is indicative of the fact that everybody is feeling a bit more uncertain about things, which is now passing through to their spending intentions.
“Over the next three months, do you expect to cut back your spending in any of the following ways?”
Despite falls in sentiment and an increase in immediate cut backs, spending intentions haven’t changed as much. If anything we’re seeing a return to more expected trends for consumers looking further ahead over the next 12 months. Non-discretionary categories have returned to the greatest priorities for consumers, followed by holidays, health, home and hobbies. At Christmas, holidays had leapfrogged everything to become the main priority for consumers after grocery shopping. Its slight decline has seen it return to the long-term norm, but even with the expected Q1 decline, spending intention remains slightly higher than 2024.
“How do you expect your spending to change on the following categories over the next 12 months?”
This is the first time in a long while that we’ve seen a quarterly decline across almost every category. Grocery may have bucked the trend - due to a combination of anticipated inflation, a continuation of the trading up trend seen at Christmas, and more eating and drinking at home as a substitute for going out - as have kids and clothing, but overall spending intentions are all down.
It’s worth highlighting that this is not a sudden downturn in anything, but is part of the wider trend that everything is feeling a little bit tighter for consumers. While intentions are actually quite similar compared to this time last year, we should view them in the context of things improving for almost every one of the last 10 quarters.
Interestingly, we’re seeing bigger variations by age group. Historically, under 25s have always been the most optimistic with their spending, often driven by the likelihood that they have fewer overheads. However, now it has become the 25 -34 year olds, reflecting the fact that they've got more money - their household finances are stronger than others, and their priorities are quite different from other age groups.
Fashion and health are disproportionately important for younger people, while older people are more likely to prioritise holidays. In our last few surveys, older people were prioritising holidays while younger people looked to health and well-being.
On the surface, this continued drop-off in sentiment will be worrying for retailers and leisure operators. But crucially, it’s worth remembering that sentiment is around the long-run average and can always recover rapidly. Things might be worsening slightly, but they’re doing so from higher.
The great unknown when it comes to consumer confidence is the short to mid-term global economic outlook. While continued uncertainty could cause consumers to tighten wallets further, a smooth and certain resolution could bring a new level of optimism, encouraging consumers to spend. But even that must be balanced against rises to council tax, phone and utilities bills that will still need to filter through to consumers, as well as wider inflationary pressures associated with global trade realignment.
The biggest concern for retailers and leisure operators will be the combination of lacklustre spending intentions and another increase in planned short-term cutbacks. The difference between these findings and those in Autumn are that, back in Autumn, people were still planning to spend more money and make fewer spending cutbacks, while at the same time saying that they expected to become worse off. Now, people tell us they both feel less well off and also intend to spend less money as a result.
Hopefully, as the wider political landscape settles, consumers will feel clearer on how much they can spend, and how much to pull back. However, as consumers begin to tighten their belts in earnest, operators will need to continue to compete for every pound of spending.
This research is based on a nationally representative survey of 2,069 adults conducted between 28-31 March 2025.
Leader of Industry for Consumer Markets, PwC United Kingdom
Tel: +44 (0)7850 515966
Global FDD Leader and Retail, Consumer and Leisure Specialist, PwC United Kingdom
Tel: +44 (0)7802 882562