Gloomy consumers are cutting back on fashion, entertainment and restaurants – June 2022
Rising concern about household budgets and the wider economy is the headline finding from the latest Eden McCallum survey of consumer sentiment in the UK and the Netherlands.
Around 3,000 UK and Dutch citizens were asked for their views on a range of questions concerning their personal and professional lives. Broadly, respondents are tightening budgets and are braced for a difficult few months. There are still some optimists out there, but in general the mood has darkened somewhat over the past six months.
UK consumers have become more gloomy about the future since October last year. 36% now hold a pessimistic view compared with 30% then. In the Netherlands, by contrast, levels of pessimism about the future have remained broadly flat since October. Dutch pessimists are outnumbered two to one by optimists, while in the UK the ratio is almost one to one.
In both markets, on a national and global level, there is a lot of concern around several issues, particularly the question of global conflict and the local economy. 69% of UK respondents are worried about global conflict, for example, as are 66% of Dutch respondents. Concern about these issues, and the broader global economy, has risen over the past six months – not surprising given the conflict in the Ukraine and concerns about a recession.
On a personal level, and as prices continue to rise, consumers are most concerned about their ability to save. Around a third of UK respondents and a quarter of Dutch ones share this concern. They are also worried about their capacity to spend and how much disposable income they have.
But while in the UK there has been a clear increase in concern around disposable income, savings, and the ability to pay the mortgage (or rent) and bills over the past six months, in the Netherlands the mood has been more stable.
The gradual ending of lockdowns and the reassessment of household budgets in a slowing economy (but with rising prices, with CPI inflation of c.6% between October 2021 and May 2022 in the UK and Netherlands1 ) have had an impact on spending decisions. Around a third of consumers in both markets have reduced their spending on entertainment, eating out, takeaways and fashion purchases in the past three months. At the same time, many report spending more on groceries.
In both countries the reasons given for this reduced spending were declining incomes and having less need or interest in certain goods and services. But this reduction in spending comes on top of earlier cutbacks made by many last year. The increase in grocery spending has been driven by inflation.
According to Sara Ghazi-Tabatabai, a partner at Eden McCallum, the challenging economic outlook and, in particular, inflation, is having a significant impact on consumers’ discretionary spending. “We can see in our data that consumers are rationalising their spending and have a rather gloomy view about their immediate future prospects,” she says. “More than ever, the value proposition and pricing decisions made by businesses are going to be vital in retaining and building market share.”
Notes: 1 ONS and Trading Economics
To view the full results, please click here for the UK and click here for the Netherlands.
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