UK consumer confidence in the recovery of the UK economy is at its lowest since March 21, according to the latest McKinsey & Company Consumer Pulse Survey conducted from May 21-24, 2020. The survey of 1,002 adults found the percentage of those optimistic about a recovery in 2-3 months has dropped 2 per cent to 15 per cent, while pessimism has risen significantly from 24 per cent to 35 per cent since McKinsey’s last survey on April 30-May 3 (a change of 46 per cent). Pessimism was defined as “COVID-19 will have a lasting impact on the economy and show regression/fall into lengthy recession”. Sixty-two per cent of consumers are very or extremely concerned about the UK economy.
The survey also shows a further reduction in the health of household finances. Household incomes were reported to drop by 42 per cent of households (38 per cent in the last survey) and 36 per cent stated their savings had declined (32 per cent in the last survey). Households are also being squeezed by spending with 25 per cent reporting an increase (a 6 per cent rise on the last survey). Fears continue to grow in households about how long they will be impacted, with 69 per cent believing their finances will be impacted for 2+ months by the pandemic (a 5 per cent increase on the last survey).
Turning to how consumers plan to spend over the next two weeks, we continue to see the UK echoing the global decline in categories almost universally. Only two categories show an expected net increase, groceries (12 per cent) and entertainment at home (4 per cent). Consumers are also making more use of discount stores and websites for basics, with 14 per cent saying they have tried this since the start of the COVID-19 outbreak, 6 per cent say they will continue doing so after it subsides.
What is clear from the latest survey is that consumer behaviour is going to change dramatically post-COVID-19 when it comes to getting out and about. Whilst only 1 per cent respondents reported they were less likely to go grocery shopping in physical stores, 21 per cent fewer says they will go to malls or undertake international travel, and 20 per cent fewer will go to movies, concerts and other events. But domestic destinations will also be impacted with 9 per cent reporting they will do less domestic travel.
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