UK Consumers Hold Back on Spending as 2026 Nears
Despite a sense of relative financial security, UK consumers are continuing to tighten their wallets as 2026 approaches. A new KPMG survey shows that households feel about as secure about their personal finances as they did at the start of the year, but this sense of security isn’t translating into a surge of discretionary spending. The result is a cautious consumer climate that retailers and policymakers cannot ignore.
Key Findings: Security vs. Spending
The KPMG study highlights a nuanced picture: financial sentiment remains resilient—households report steady incomes, savings, and manageable debt levels. Yet the willingness to spend on non-essentials remains subdued. Several factors help explain this paradox:
- Inflation and price pressures: Ongoing price increases, especially for everyday goods and essentials, have eroded disposable income and conditioned consumer expectations toward tighter budgets.
- Economic uncertainty: Concerns about macroeconomic stability, job security in certain sectors, and global market volatility weigh on decisions to commit to larger purchases.
- Savings at the ready: Many households report a desire to build or maintain financial cushions, preferring to wait for clearer signals before big-ticket buys.
Impact on Retail and Economic Growth
The reluctance to spend has tangible consequences for the high street and online retailers. Sales momentum for non-essential categories—electronics, fashion, and discretionary experiences—remains softer than pre-pandemic norms. While essential goods see steadier demand, retailers are responding with cautious inventory planning and price promotions aimed at sustaining footfall without eroding margins.
Regional Variations and Demographic Trends
The survey suggests regional differences in spending behavior. Consumers in areas with higher living costs and greater exposure to inflation tend to tighten budgets more aggressively. Younger spenders display a mix of cautious optimism and restraint, prioritizing value and affordability, while older cohorts balance spending with a stronger emphasis on savings and debt reduction.
What This Means for Consumers
For households, the message is not one of panic but prudence. Experts advise prioritizing essential needs, boosting emergency funds, and avoiding high-interest debt. If income growth remains modest, maintaining a disciplined budget and exploring value-driven purchases can safeguard financial well-being heading into the new year.
What This Means for Policy and Industry
Policy makers and retailers should consider measures that bolster confidence without over-stimulating demand. This could include clearer guidance on cost-of-living support, targeted consumer incentives, and flexible payment options that help households navigate price volatility. For retailers, refining value propositions, offering transparent pricing, and enhancing customer experience can help sustain traffic even when shoppers are cautious.
Bottom Line
The KPMG findings portray a UK consumer landscape that feels secure but spends cautiously. As 2026 looms, the challenge for businesses and policymakers is to align value, transparency, and affordability with the evolving priorities of households.
