The final quarter of 2020 saw consumer confidence fall by 1%, to a near-record low -17%, according to the latest Deloitte Consumer Tracker.
It found with the exception of personal finances, all other measures of confidence were below year-on-year comparisons, with ‘health and wellbeing’, and ‘children’s education and welfare’ categories reaching historic lows.
Deloitte’s analysis is based on responses from more than 3,000 UK consumers between 1st and 4th January 2021, after a Brexit deal had been reached, and as a third national lockdown was announced.
It said the emergence of a more virulent strain of Covid-19 saw confidence around health and wellbeing fall six percent points in Q4 2020, the lowest level ever recorded at -34%.
It added that continued questions over the reopening of schools after the Christmas holidays meant that confidence in children’s education and welfare also reached a record low, falling four percentage points to -17%.
However, Deloitte said the extension of some major government and private sector income-support measures, such as the furlough scheme and payment holidays on loans, mortgages and credit cards, boosted confidence in personal finances, improving sentiment in the fourth quarter.
With many consumers working from home, free of commuting costs and unable to spend on holidays or socialising, 31% of respondents said their savings had increased in 2020 with Millennials leading the way (35%). By contrast, 29% of consumers said their savings had decreased over the same period, with 30% of Gen-X and 30% of Baby Boomers each falling into this category.
Whilst overall sentiment on levels of household disposable income was flat in Q4 2020, at -17%, it remains a percentage point higher than the same time last year, prior to the COVID-19 outbreak.
Ian Stewart, chief economist at Deloitte, said: “High levels of savings combined with confidence in household disposable income point to favourable conditions for supporting growth in consumer activity when the recovery comes.
“The easing of lockdown restrictions, coupled with vaccines being more widely rolled out and strong personal finances, should unleash pent-up demand to spend.”