Consumer confidence has fallen in the North East as rising interest rates and high inflation hit people in their pockets, an influential survey suggests.
The latest Deloitte Consumer Tracker reveals consumer confidence in the North East fell by five percentage points between April and June, while the region’s sentiment on the UK economy dropped by 14 percentage points, higher than the national average.
The survey comes at a time of conflicting data on the state of the region’s economy, with historically low levels of unemployment but a big rise in business failures and suggestions that the North East has the lowest pay in the UK and highest levels of insecure work. The Deloitte survey found that people’s feelings towards job opportunities and their level of debt were also falling significantly in the North East, as rising interest rates cause a slowdown in the economy.
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Andrew Coticelli, tax partner and consumer business lead at Deloitte in the North East, said: “Compared to the rest of the UK, it’s a gloomier picture in the North East as consumer confidence fell by five percentage points in Q2. Four of the six categories measuring consumer confidence decreased from the previous quarter.
“Confidence in the level of debt shows that personal finances remain under pressure as interest rates rise in response to inflationary pressures and housing is the number one monthly expenditure for many consumers. The impact of these rises on the cost and availability of mortgages will likely push sentiment towards level of debt down even further in the next three months.
“The decrease in consumer confidence about job opportunities is likely due to businesses reigning in spending and indicating a more negative attitude towards hiring in the next 12 months. Consumers in the North East are spending less on essential items, especially utility bills which remain a concern for householders.
“Less is being spent on discretionary items, particularly clothing and footwear. In the region consumers are also tightening their purse strings and expecting to spend less in the next three months with a decrease in most categories.”
Nationally, the Deloitte survey found that UK consumer confidence improved for a third consecutive quarter in the second quarter of the year, though it remains below its long-term average. The report found people turning to supermarket own-brand goods or cheaper supermarkets to reduce food bills, and also trying to reduce energy use.
Céline Fenech, consumer insight lead at Deloitte, said: “A combination of five bank holidays, nationwide celebrations for the King’s Coronation and the hottest June on record may have encouraged some people to loosen the purse strings. However, the proportion of consumers adopting coping strategies to manage the rise in the cost-of-living has remained relatively consistent quarter-on-quarter.”
