New figures released this morning present a complex challenge for Chancellor Rachel Reeves, revealing a significant drop in consumer confidence even as the government prepares to announce a major new rail investment for London.
Public Spending Expectations Plummet
According to data from the British Retail Consortium (BRC) and Opinium, public confidence has fallen sharply amidst intense speculation about the upcoming budget. Consumer expectations for the state of the economy over the next three months have dropped to minus 44, down from minus 35 in October.
BRC chief executive Helen Dickinson pointed to "strong hints" from the government about potential income tax increases as a key factor behind the public's declining spending expectations, even with the Christmas season approaching. Although a planned increase in income tax rates was abandoned last week, Prime Minister Sir Keir Starmer has refused to rule out freezing income tax thresholds—a move critics describe as a stealth tax rise.
Ms Dickinson emphasised that months of uncertainty have "heightened public concern about their own finances and the wider economy." She called for action from Chancellor Reeves to address the "spiralling cost burden facing retailers," arguing this would help keep price increases under control.
Fragile Jobs Market Recovery
In more positive news for the chancellor ahead of her budget statement next Wednesday, new research suggests the jobs market might be improving. The Recruitment and Employment Confederation reported that the number of new job adverts last month reached 754,359, representing a 2.1% increase from September and bringing the total to more than 1.6 million.
The report noted particular increases in advertisements for medical radiographers, delivery drivers and couriers, and further education teaching professionals. However, it cautioned that this apparent recovery remains "fragile" following last year's budget decision to increase national insurance contributions for employers, which was blamed for a market slowdown and rising unemployment.
Major Transport Investment for London
One clear winner from the upcoming budget appears to be London Mayor Sir Sadiq Khan, who has welcomed reports that the Docklands Light Railway (DLR) will receive £1.7 billion for an extension to Thamesmead.
The project, confirmed by the Press Association, will see the line extended from Gallions Reach near London City Airport and include a new station at Beckton as well as in Thamesmead itself—an area that has been notoriously underserved by public transport since its development in the 1960s.
Sir Sadiq stated that the DLR extension "will not only transform travel in a historically under-served part of the capital but also unlock thousands of new jobs and homes, boosting the economy not just locally but nationally."
The transport investment is expected to be transformative, potentially unlocking land for 25,000 new homes and up to 10,000 new jobs, alongside nearly £18 billion of private investment in the area.
