The news all over Western democracies is not good when it comes to a once very globalised world. IN the end, it is consumer confidence that is all-important – without it – recession looms. Or in the case of rising inflation and recession – stagflation – the worst of all worlds from an economic point of view.

It was inevitable with all the news about inflation, the cost of living crisis, increased taxes and so on that consumer confidence would suddenly tailspin. Two separate surveys today now highlight a dramatic shift in overall sentiment to confirm this.

The Times reports that – “The mood among consumers about their finances has fallen to its lowest level since the first Covid-19 lockdown, according to PwC, the accountancy firm. Concerns about rising prices and the cost of living have pulled consumer sentiment down to -20, only a fraction higher than the -26 reported at the start of the pandemic.”

PwC said that there had been a “complete reversal” in consumer priorities compared with a year ago when households were preparing to spend once lockdown restrictions were eased.

Retail Economics has provided data that confirms this gloomy view. It has warned of a £12 billion hit to non-essential spending as discretionary income falls this year by up to 19.5 per cent for the least ­affluent households.

Richard Lim, chief executive of Retail Economics, said: “We’re likely to see recessionary behaviours kick-in for many households, who will cut back on the nice-to-haves and will prioritise low costs to make their budgets stretch that little bit further. A more cost-conscious consumer will emerge in the coming months, looking to form new relationships with brands that can align to these new priorities.”

The Commons Libray reports that in 2019/20 there were nearly 12 million people living in relative poverty. But that was before this latest crippling round of hits to incomes. The New Economics Foundation reports that 23.4 million people will be unable to afford the cost of living crisis. Alarmingly, the average shortfall for those below this threshold will be £8,600 per year.

The startling figure that emerges is that whilst 34.2% of the UK population will be facing bills they can’t pay – the increased cost of living will mean that nearly half (48%) of children will be living in households unable to provide them with an acceptable standard of living. For single people with children that figure rises to 77 per cent.

With almost half of the population now making drastic cuts to expenditure – a recession is imminent – and rapidly consumer confidence is the signal that confirms this.