UK households are drowning in debt as loan access dries up and appetite for big purchases hits 10-month low
UK households are feeling the pinch more than ever, with rising debt levels clashing against a sharp drop in loan availability, according to the latest S&P Global UK Consumer Sentiment Index (CSI).
The Index paints a gloomy picture, with families increasingly worried about borrowing while their willingness to splash out on big-ticket items like cars or home improvements has slumped to its lowest point in ten months.
The CSI, which tracks household financial wellbeing, labour market conditions, spending, savings, and debt, edged up slightly to 44.8 in February from 44.6 in January. Survey data, collected from 1,500 UK households between 5-9 February 2026, shows sentiment remains firmly at lower levels, exacerbated by bad weather and broader economic pressures.
“The mood among UK households matches the dismal weather seen so far this year across the country. Although the overall degree of gloom has lifted slightly since January, consumer confidence continues to run at one of the lowest levels seen over the past two years,” said Maryam Baluch, Economist at S&P Global Market Intelligence.
Debt concerns
One of the key reasons for the lower sentiment is debt. Households reported a stronger rise in debt, the fastest accumulation since last July, with levels increasing across most age groups, hitting 18-24-year-olds hardest.
At the same time, the need for unsecured credit (think credit cards or personal loans) is climbing, but availability is plummeting at the steepest rate since August 2024. The Debt Sentiment Index dropped to a 23-month low of 48.2, highlighting intensified worries.
This debt squeeze is spilling over into spending habits. The appetite for major purchases dipped to a 10-month low, with the index falling to 35.1 from 35.6.
Overall spending sentiment ticked up marginally to 37.4, but it’s still pessimistic, with cash available to spend improving slightly to a four-month high of 39.7. Savings, however, continue to take a hit, falling sharply across all regions.
A stagnant labour market is not helping either. Sentiment here cooled to an eight-month low of 52.0, driven by slower workplace activity growth, the weakest in over a year, particularly in retail and manufacturing.
On a brighter note, job security edged into positive territory for the first time in four months at 50.5, and income from employment rose slightly to 52.1. But this aligns with official data showing a slowdown in pay growth, adding to the financial strain.
Regionally, the pain is widespread. Current finances deteriorated across all 12 UK regions and nations, with the East Midlands hit hardest. Only London, the West Midlands, and the North West expect any improvement in finances over the next year. Private sector workers are less optimistic about the future, while public sector employees are significantly more pessimistic.
“Households’ appetite for major purchases was impacted by the lack of confidence and debt worries, with sentiment around big ticket expenditure slipping to the lowest in ten months. The low appetite to spend bodes ill for the broader impetus to purchase, hinting at a sustained drag on economic growth from sluggish consumer spending in the first quarter,” said Baluch.
