UK consumer confidence has fallen sharply in March, adding further strain to an already pressured retail sector as geopolitical uncertainty weighs on spending intentions.
According to GlobalData’s latest UK Consumer Sentiment report, future consumer sentiment dropped by 8.2 points month on month, representing the steepest decline since the first UK Covid lockdown in 2020.
The downturn follows escalating tensions in the Middle East, with data collected in early March immediately after US and Israeli strikes on Iran began.
GlobalData said the research evidences growing concern among UK consumers about the UK’s economic outlook, with 63.3 per cent now expecting the economy to worsen over the next six months.
Sentiment has also fallen below levels recorded around the UK budget announcement in November 2025.
The data points to a challenging outlook for retailers, particularly across discretionary categories, as consumers reassess spending priorities amid heightened uncertainty.
Sofie Willmott, associate director of retail at GlobalData, said: “The significant fall in consumer confidence will be a real concern for UK retailers who have faced years of challenges post-Covid and will have been hoping to see consumer sentiment rise in 2026.
“Uncertainty around the economy and their personal finances is likely to lead consumers to pull back on discretionary spending, causing more pain for struggling non-food retailers.”
The report also emphasises shifting expectations around interest rates, with almost half of UK consumers anticipating further increases this year.
While higher rates may benefit savers, GlobalData said they are likely to further constrain retail spending by increasing pressure on mortgage holders, particularly those coming to the end of fixed-term deals, as well as first-time buyers and those planning to move house.
Willmott added that a higher interest rate environment could reinforce more cautious financial behaviour among affluent consumers.
“It will encourage more affluent consumers to continue saving, rather than spending on retail,” she said.
“It will also mean more of consumers’ monthly outgoings will be swallowed up by interest paid on mortgages, as borrowers change deals, once again diverting funds that could be spent on retail products.”
GlobalData said ongoing geopolitical instability is likely to prolong uncertainty, with consumers expected to delay major financial decisions until there is greater clarity.
For retailers, the findings reinforce the fragile nature of demand and increasing volatility in 2026, with limited visibility on when consumer confidence, and in turn discretionary spend, may begin to recover.
Click here to sign up to Retail Gazette‘s free daily email newsletter
