Fears of a "painful budget" next month have knocked morale among UK consumers – a bad sign for the economy. The latest poll of UK consumer confidence has fallen sharply this month, with optimism over people’s personal finances, their purchase intentions, and the state of the economy all sharply lower than in August. The index, published by the data provider GfK, has dropped to -20 this month, down from -13 in August. Consumer confidence had been improving as the economy grew robustly in the first half of this year and inflation dropped. But September’s large drop has almost wiped out the recovery in confidence seen since the spring. A few days before the survey began, Keir Starmer warned in a setpiece speech that the budget was “going to be painful”, and: “Things are worse than we ever imagined”, after the government discovered what it calls a £22bn “black hole” in the public finances. On the final day of the survey, Starmer hammered the point home, warning that painful decisions such as cutting the winter fuel payment were necessary to fix the UK. Retail sales in Great Britain jumped last month despite the slump in consumer confidence. The Office for National Statistics has reported that the volume of goods bought in August rose by 1%, after a 0.7% rise in July. Some supermarkets and clothing retailers reported a boost because of warmer weather and end-of-season sales, the ONS said. Sales rose fastest at textile, clothing and footware stores, followed by food outlets, in August. The agenda • 9am BST: the Bank of England policymaker Catherine Mann speaks about the issue of macroeconomic adjustments after large global shocks • 3.50pm BST: European Central Bank chief Christine Lagarde to give 2024 Michel Camdessus annual central banking lecture We’ll be tracking all the main events throughout the day ...
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