Pessimism weighing on Britain’s households has hit unprecedented levels as the cost-of-living crisis pushed confidence in the economic outlook to its joint lowest, a survey showed.

Market research firm GfK said consumer morale gauge, dating back to 1974, touched an all-time low of -40 in May from -38 in April. Economists polled by Reuters had expected -39.

Past readings this low have presaged recessions and Friday’s survey will further pressure finance minister Rishi Sunak to give more help urgently to households facing the highest rates of inflation since the early 1980s.

GfK’s gauge of economic optimism for the coming 12 months matched a record low hit in April 2020 as the coronavirus pandemic swept the country. While business surveys and jobs data show a healthier picture – one reason why the Bank of England has raised interest rates – this was also the case in 2008 when a severe downturn followed as the global financial crisis unfolded.

“Consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the Covid shutdown,” said Joe Staton, client strategy director at GfK. Even recessions in the early 1980s and early 1990s – a time of double-digit interest rates and high unemployment – produced less pessimism than the current crisis which is playing out against the backdrop of the war in Ukraine.         Source: Reuters