The possibility of higher taxes, as indicated by shadow chancellor Rachel Reeves, has led to a significant decline in consumer confidence, impacting the home improvement sector.
Jamie Everett, co-founder of bespoke kitchen manufacturer, noted a sharp drop in orders after a robust start to the year. He observed, “In September, it’s like somebody just turned the tap off. The Budget is the big roadblock right now.” Many customers are adopting a cautious wait-and-see approach, concerned that tax increases could reduce their disposable income.
Kitchen retailers, such as those in Dorset, report customers explicitly stating they are waiting for the Budget before proceeding with orders. This uncertainty has had a broader impact on consumer confidence across the home improvement sector. According to GfK’s consumer confidence index, sentiment dropped seven points in September to -20, highlighting household financial insecurity.
Retailers are also dealing with the aftereffects of supply chain disruptions and rising costs from recent years. Vince Gunn, CEO of Harvey Jones, highlighted that despite a relatively positive economic outlook earlier in the year, the positioning of the Budget has further eroded consumer confidence.
Nick Glynne, CEO of a large home items retailer, echoed these concerns, citing a 9% decline in website traffic following discussions about potential tax increases. He stressed the dependence on disposable income, stating, “We’re dependent on excess cash,” and emphasizing the impact fiscal uncertainty is having on high-value purchases like kitchens.
As the sector anticipates clarity in the autumn Budget, kitchen retailers remain cautious. Many fear that significant tax hikes could prolong a challenging market environment for up to six months. The potential strain on consumer spending could further exacerbate challenges for businesses already dealing with years of economic turbulence.
Kitchen retailers are bracing for the autumn Budget with trepidation, understanding that potential tax increases could significantly affect consumer spending and prolong market difficulties.