UK Consumers Remain Reluctant to Increase Spending Entering 2026 Amid Economic Concerns
A KPMG pulse survey of 3,000 people reveals that UK consumers are expected to continue limiting their spending in early 2026 due to ongoing concerns about the economy and household cost pressures. The survey covers consumer behavior in the fourth quarter of 2025 and spending intentions for the first quarter of 2026.
Consumers are still coping with high costs of food and energy after years of inflation, resulting in a weak appetite for discretionary items and big-ticket purchases such as cars and furniture. Only 56% of respondents felt secure in their personal finances entering 2026, a slight decrease from 57% at the start of 2025.
Concern about the economy’s health increased throughout 2025, with 43% of people saying the economy was worsening at the year's start, rising to 58% by year end. Age groups differed in their outlook, with older respondents (65+) being more pessimistic and those aged 35–44 showing more optimism; 24% of the latter group believed the economy was improving compared to 13% overall.
Inflationary pressures have eased slightly with the Consumer Price Index (CPI) slowing to 3.2% in November 2025, although the cumulative CPI rise from January 2021 to May 2024 was about 23%. In response to the economic environment, the Bank of England cut the policy rate from 4% to 3.75%, which is seen as supporting business and consumer confidence amid easing inflation and more stable public finances.
Government measures cited to help households include higher incomes offsetting inflation, real wage gains in the first year of the current government, increases to the national living wage and minimum wage, a £150 reduction off energy bills, extended freezes on prescription fees and fuel duty, and a rail fare freeze for the first part of 2026.
