The UK economy faces a turbulent six months, with trade tariffs, political instability and the cost of living crisis fuelling widespread pessimism among savers, according to the latest sentiment survey from the Family Building Society.
Nearly three-quarters of respondents to the mutual’s biannual survey expect the economy to slow in the coming half-year, while just over 90% said trade tariffs would have a negative impact. The data, drawn from more than 2,600 Society members, suggests confidence has deteriorated markedly compared to previous surveys.
Alistair Nimmo, director of marketing at the Family Building Society, said: “Our six-monthly survey of our members’ financial wellbeing continues to reflect a general mood of pessimism for the UK and global economies. Indeed, it is probably the most pessimistic our members have felt in the five surveys we have carried out to date.
“The threatened introduction by the USA of trade tariffs this spring has only added to the uncertainty facing everyone, particularly the personal finances of younger family relatives of our members.”
Three-quarters of respondents believe trade tariffs could prompt the Bank of England to cut interest rates by between 0.25% and 0.5% in an attempt to counteract economic pressures. Over 40% of members said they expect their personal financial circumstances to worsen, while 28% foresee a hit to their pensions and investment income. Of those, two-thirds regard the threat as a risk to their financial wellbeing.
There is also growing anxiety for future generations, with 40% of respondents stating that their children or grandchildren are feeling pessimistic about their own finances. Despite this, most members reported not having had to provide financial support to family members over the past six months.
In contrast to the overall tone, 65% of respondents said they are content with their current financial position. A handful of members also noted potential short-term benefits from shifting global trade patterns, citing the possibility of cheaper imports and downward pressure on interest rates.
One member noted: “In the short term, there may be cheaper goods being imported or sold in the UK from China, primarily due to the enormous 145% blocking tariff imposed by the USA. China (and other Asian countries) still need to sell their manufactured goods to remain in business.”
Others suggested the tariffs could encourage increased consumer spending or act as a trigger for the Bank of England to lower interest and mortgage rates.
However, the dominant view was one of caution, with members warning of broader economic repercussions. One respondent commented: “They will inhibit growth in this country and even more so elsewhere in the world, including America, which appears to perceive tariffs as a punishment more than a reappraisal of trade relationships.”
Another warned: “It will make exports more expensive. This will make our exports less affordable and less in demand. If manufacturers reduce or cease production, not only will this affect the manufacturer but all the businesses that rely on this trade.”
While a minority pointed to possible gains in bond markets if investors retreat from equities, most members appear braced for further economic headwinds. The Family Building Society’s findings add to a growing chorus of concern over the direction of the UK economy as it navigates global uncertainty, volatile trade relations and domestic financial pressures.
