Retail Giants Lose Almost One Billion Pounds Amid Consumer Fear Index Warning

Close to one billion pounds was erased from the stock market value of some of Britain’s leading retailers on Tuesday as rising anxiety over potential tax hikes and job losses dented consumer confidence. Deutsche Bank analysts issued a warning that their “fear index” has begun indicating increased apprehension among British consumers. With a weakening employment market and inflation mounting once more, the outlook on personal finances has shifted negatively ahead of the autumn budget.

Analysts expressed concern that recent tax increases from the November 2024 budget could be repeated in this year’s budget, likely placing further downward pressure on consumer spending. Their analysis shows households are already spending less than their income could support, largely due to worries about unemployment. Unless households dip into their savings, discretionary spending is expected to decelerate throughout the remainder of 2025. Those on lower incomes are bearing the brunt of higher inflation, prompting Deutsche Bank to downgrade Associated British Foods—the owner of Primark—to “sell”. Next, another well-known high street retailer, featured on their “least preferred” list as well.

In addition to fashion retailers, Deutsche Bank forecasts a reduction in expenditure on home improvements, spelling further trouble for DIY chains which have already suffered two years of slowing sales. Wickes was downgraded to “sell” while Kingfisher, the parent of B&Q, received a “hold” rating. Wickes led the declines, its share price retreating by 8.6 per cent to 201.5p, a three-month low. Kingfisher lost 4.3 per cent to 269p. Marshalls, a supplier of paving stones, fell 3.2 per cent to 182.25p, marking its lowest in a decade despite not being mentioned by Deutsche directly.

Associated British Foods suffered its sharpest daily decline since April, dropping 4 per cent to £22.22. Online retailer Asos also participated in the sell-off, while Next saw its shares decline marginally despite warnings from analysts. Collectively, the market value of these six firms shrank by about £965 million, with Associated British Foods accounting for a substantial portion of the loss.

Deutsche’s “fear index” now suggests consumers across all income brackets feel more anxious than at any point since the pandemic. Traditionally, the least affluent households have struggled the most in difficult economic conditions, but current data suggests even higher income groups are growing uneasy about their financial prospects. While those with lower incomes are squeezed hardest by inflation, the wealthiest are likely to be most affected by any new tax measures due in the Chancellor’s October statement.

Disposable incomes among middle income families recorded their first decline in nearly two years, falling by 1.6 per cent in July according to a joint report from Asda and the Centre for Economics and Business Research. For the lowest income group, the decline was steeper—a drop of 11.1 per cent, resulting in a weekly shortfall of £73. Research attributed these trends to the resurgence in goods price inflation, which hit 3.8 per cent in July, and stagnant personal tax thresholds. The labour market has also been pressured by a £25 billion increase in employers’ national insurance contributions. Although private sector wages rose by 4.8 per cent in the last quarter, ongoing inflation is expected to curtail their positive impact on household spending power.