Middle-class homeowners across the UK are putting off plans to renovate their kitchens as concerns grow over potential tax rises in the upcoming Budget in October.
The possibility of higher taxes, flagged by shadow chancellor Rachel Reeves, has led to a marked drop in consumer confidence, according to kitchenware retailers.
Jamie Everett, co-founder of bespoke kitchen maker Naked Kitchens, noted a sharp drop in orders after a strong start to the year. “In September, it was like someone just turned off the tap,” he said. “The budget is the big hurdle now.”
Many customers are taking a wait-and-see approach, fearing that the tax increases will hit their disposable income. Kitchenware retailers such as Thomas Matthew in Dorset say some customers have explicitly stated that they are waiting for the budget before proceeding with orders.
Uncertainty has had a significant impact on consumer confidence in the wider home improvement sector. According to GfK’s Consumer Confidence Index, sentiment has fallen by seven points in September to -20, suggesting that households are feeling less secure about their finances.
Retailers have also been hit by supply chain disruptions and rising costs in recent years, with Vince Gunn, chief executive of Harvey Jones, noting that the budget situation has further dampened consumer confidence, despite a relatively positive economic outlook earlier in the year.
Nick Glynn, chief executive of Buy It Direct Group, which sells large household goods such as appliances and furniture, echoed these concerns, pointing to a 9% drop in website traffic following public discussions about potential tax increases. “We’re running on excess cash,” Glynn said, highlighting the impact of financial uncertainty on big-ticket purchases such as kitchens.
As the sector awaits clarity in the autumn budget, kitchenware retailers remain cautious, with many expecting the tough market to last for up to six months if significant tax increases are imposed. The potential squeeze on consumer spending could exacerbate the challenges facing businesses already struggling after years of economic turmoil.