A combination of concern about the economy, household essential cost pressures, and discretionary spending caution will continue to limit overall spending, new data from KPMG shows.
The findings come from KPMG UK’s latest Consumer Pulse survey, which asked 3000 UK consumers about their spending in Q4 2025 and their intentions for Q1 2026 and beyond.
Some of the key findings show:
- 56% of consumers continue to feel financially secure – only down 1% from the start of 2025.
- 58% of people think the UK economy is getting worse – up from 43% when 2025 began.
- Half (49%) of those who think the economy is worsening say they are cutting their discretionary spending.
- Only 13% of consumers say their discretionary spending will be higher in 2026 than in 2025.
- 42% of consumers plan no big-ticket spending in Q1 2026, but 25% plan to spend toward a holiday.
- If consumers had more discretionary budget in 2026, most (32%) would put it toward holiday costs.
The cost of groceries (81%), utilities (75%), and eating or drinking out (53%) are the three most common reasons that people feel that the economy is worsening. Consumers aged 65 or over are most likely to say that the UK economy is getting worse (at 70%), and those aged 35 to 44 are most likely (at 24%) to say it’s improving.
Reflecting on what their current feeling of financial security means for their discretionary spending plans in 2026, among all 3000 consumers polled:
- 47% plan to spend the same amount on things they want in 2026 than in 2025.
- 27% plan to spend less on things they want in 2026 than in 2025.
- 13% plan to spend more on things they want in 2026 than in 2025.
- While 13% are not sure.
42% of consumers say they will buy no big-ticket items in the first quarter of 2026. Among those planning to spend, putting money toward a holiday is the most common (25%) plan – and is also the thing that consumers would be most likely to put their money toward if they had more discretionary spending power during 2026.
But there are indications of other Q1 spending plans, including on:
- 14%: Minor home improvements.
- 10%: Major home improvements.
- 10%: Furniture.
- 10%: Home appliance(s).
- 9%: Personal technology.
- 8%: Mobile phone.
- 7%: Home electronics.
“It is good news that the majority of consumers feel financially secure and there are welcome signs of targeted discretionary spending plans. But a landscape of consumers adjusting to higher household essential outgoings and spending caution due to perception of a worsening economy is set to continue into 2026,” said Linda Ellett, Head of Consumer, Retail and Leisure for KPMG UK.
“Annual consumer spending growth looks set to be sluggish again, with available discretionary budget prioritised – particularly for the likes of holidays and home improvements. Competition among consumer businesses for the remaining share of the available consumer spend will be fierce, with an ever-sharpening focus on business models, efficiencies, and profit margin.”
Leave a Reply