Consumer confidence crashes to a three-year low as Iran war and political chaos in the UK take their toll

Households are the most downbeat they have been for nearly three years as political chaos in the UK and conflict in the Middle East take their toll.

S&P Global said its consumer sentiment index fell to 42.1 this month – its lowest level since July 2023, when rising energy bills after the invasion of Ukraine were squeezing family finances.

Morale among households has fallen for three months in a row after US and Israeli attacks on Iran at the end of February.

The report came amid warnings the global economy is weeks away from recession. EU transport commissioner Apostolos Tzitzikostas said: ‘[If the Iran war] does not end in the coming weeks, and we don’t have the reopening of the Strait of Hormuz, I’m afraid a world recession could be on the table.’

Official figures today will reveal where unemployment stood at the end of March, after it leapt from about 4 per cent to 4.9 per cent under Labour.

That will be followed by inflation figures tomorrow.

Maryam Baluch, of S&P Global, said: ‘Outside of the pandemic and Ukraine-related energy price spike, we have not seen households this downbeat since 2012.

‘The rising cost of living is eating into savings and causing concern over future finances, in part due to growing conviction that interest rates are soon going to start rising.

‘The uncertain climate fuelled by the war has exacerbated worries over domestic government policy, pushing job insecurity to its highest for more than three years.’