Consumers decline to splash cash despite surging optimism

Consumer confidence rebounded to the highest level it has been in September in the past seven years

Consumers are feeling remarkably confident over their finances but remain unwilling to spend on anything other than groceries and DIY, a survey has found.

PwC said that consumer confidence had rebounded back to pre-pandemic levels, and was now the highest it has been in September for seven years as people are “genuinely confident in the strength of their personal finances”.

Those aged between 18 and 24 were the most positive, despite uncertainty over their future following the furore over A-level results in the summer.

“An overwhelming majority [of people] believe they either won’t be affected by unemployment or will find alternative work if they are,” PwC said.

Although the survey found that many consumers were confident over their finances, PwC said the majority of people were planning to cut back their spending in almost every area, from eating out and holidays, to clothing and beauty products.

More than half of those asked in the survey said they would be spending less on going out, while a third said they would be reining in their spend on clothes and accessories.

Groceries and DIY proved to be bright spots, as more consumers trade nights out for home cooking and redecorate their homes, having spent months inside during the lockdown.

PwC’s consumer markets leader Lisa Hooker said it was “heartening” that consumer sentiment remained resilient, but warned over the hit to the high street. Ms Hooker said retailers needed to “adapt what they do if they’re going to give consumers a reason to spend”. 

The survey comes after economists warned over a spending slump if the end of the furlough scheme causes unemployment rates to surge.

Last month, Rishi Sunak unveiled a wage subsidy scheme to replace the earlier scheme, which will require employees to work at least a third of their normal hours.

Experts have warned this scheme could cause unemployment to double with more than one in 10 employees still on furlough by last week.

Are you resisting the temptation to spend? Tell us why in the comments section below.