Client confidence within the UK took a pointy flip in Q2 2025, in response to Deloitte’s newest Client Tracker, falling by 2.6% to 10.4%, which is the bottom degree recorded since early 2024. The drop marks the primary important dip in sentiment since October 2022, when inflation hit a 40-year excessive.
The decline spans all six of Deloitte’s shopper confidence measures, with job safety registering the steepest fall, down 4.8%. Sentiment round job alternatives and profession development additionally slid by 3.9%, reflecting issues over rising employer prices and a cooling labour market.
Céline Fenech, shopper perception lead at Deloitte, stated: “For the previous couple of years, we’ve seen shopper confidence stay comparatively resilient regardless of a number of financial challenges, geopolitical uncertainty, and the elevated value of residing.
“After recovering from its lowest degree on file within the third quarter of 2022, when inflation peaked to a historic excessive, our shopper confidence index has declined for the primary time in nearly three years.
“This drop in confidence alerts a weakening of customers’ resilience, as issues of a slowing labour market have left customers nervous about job safety and earnings progress prospects, whereas persistent inflation and a excessive value of residing have negatively impacted sentiment in the direction of private debt. Nevertheless, we’ve seen how the temper of the patron can change and adapt to new circumstances. If an uptick in each financial progress and enterprise sentiment reduces pressures on the job market and on earnings, a return to optimistic confidence may nonetheless be on the playing cards.”
In a contradictory twist, whereas general confidence declined, customers had been barely extra optimistic concerning the UK financial system itself. Confidence within the state of the financial system rose by 3.9% in comparison with the earlier quarter, though this stays 18.4% decrease than in Q2 2024.
Ian Stewart, Chief Economist at Deloitte, added: “Exercise within the UK has slowed in latest months, however an uptick in enterprise confidence seen within the newest Deloitte CFO Survey testifies to continued resilience amid geopolitical uncertainties.
“Increased inflation – which is nicely above ranges within the US and EU – coupled with a weaker jobs market is weighing on shopper sentiment. The UK is unlikely to see inflation returning to the 2 per cent fee that prevailed final summer time till nicely into 2026, so the UK shopper should navigate a number of months of uncomfortably excessive inflation.”
Whereas important spending declined by 4.6%, discretionary spending was up by 1.5%, with notable will increase in clothes and footwear (up by 6.6%).
Oliver Vernon-Harcourt, Associate and Head of Retail at Deloitte, commented: “General, shopper spending has been extra risky in latest months, displaying each optimistic and unfavourable developments. Customers stay cautious, little question because of the impression of persistent meals inflation and better power costs. As demand for greater ticket objects equivalent to home equipment, electricals, and furnishings remained gradual in Q2, customers additionally spent much less on necessities as they prioritised saving and spending disposable earnings on holidays and consuming out.
“General, tactical spending has change into extra embedded in customers’ behaviours and mixed with their issues concerning the outlook for jobs and unemployment, may imply shopper demand will stay subdued till confidence within the UK financial system additional strengthens and stabilises. Wanting forward, extra optimistic knowledge can be required to again up any sustained progress in shopper spending.”
For trend manufacturers, this alerts a to supply to supply extra worth and emotional resonance to win their share of wallets within the months forward.
