The findings come from KPMG UK’s Consumer Pulse survey, which indicated that 57% feel secure, whereas 21% said to be insecure about their financial situation at the end of 2024.
Half of the respondents said that they could spend freely (but larger purchases needed to be planned), while just 3% said that they could not pay essential bills or were incurring debt to do so. One in ten said to be ‘impacted’ and having to limit or cut discretionary spend to pay for essential costs.
While the picture for financial security is largely positive, consumer opinion regarding the health of the UK economy was more mixed – with 43% of consumers saying that the economy is worsening, compared to a quarter saying it’s improving.
Pessimism about the UK economy is highest among two-thirds of those aged sixty-five and over, with those aged 25-34 the most optimistic. Regionally, London is the most upbeat, with the North East the most downbeat about the economy.
Linda Ellett, Head of Consumer, Retail and Leisure for KPMG UK, said: “Whether due to confidence in their ability to spend or their ability to manage household bills, it is positive news that the majority of UK households are heading into 2025 feeling financially secure. Despite four in ten people saying the UK economy is worsening, a higher amount than those thinking it is improving, planned spending on big ticket items over the next twelve months looks healthy. Whether that spend comes to fruition will depend on a range of factors, including continued reduction in interest rates and whether perception about economic worsening becomes a reality in the form of increased job insecurity.”
2025 spending intentions
Despite mixed opinion on the economic outlook, the survey suggests that 80% of consumers plan to make big ticket purchases in 2025 – most commonly on a holiday (39%). A fifth of consumers are planning minor home improvements, with 10% intending to purchase a new car, and a further 10% planning major renovations of their home.
According to the survey, a wage rise would be the most likely reason to increase an individual’s spending beyond 2024’s levels. 30% of the respondents said that retailer promotional events could encourage more spending during the course of the year, with 22% saying improved loyalty scheme prices would.
Ellett added: “Promotional periods and the value consumers place on loyalty pricing throughout the year have all demonstrated that shoppers remain savvy when it comes to searching out better deals. This will continue in 2025 and our research shows that up to a third of consumers may increase their overall spending levels if retailer offers are sufficiently appealing to them. Retailers will be looking to capitalise on this by using customer data and AI to ensure offer targeting is increasingly personalised in the coming twelve months.”
The KPMG survey gauges quarterly confidence and buying behaviour of 3000 people across regions, ages and income groups during December.