The economic impact of high interest rates set to hit Gen Z spending for the next 12 months will prolong the challenge for retailers and hospitality businesses as discretionary spend gets squeezed.
That’s the view of auditing and accounting company RSM UK, on whose behalf a survey of 2,000 consumers was conducted. This shows Gen Z are increasingly concerned about the economic climate, despite signs of hardship easing.
The majority of Gen Z consumers are particularly concerned about the impact of high interest rates (84%) on their future spending, closely followed by the housing market at 82%.
The pressure on Gen Z spending is acute, with almost a third (29%) stating that they don’t have any monthly income left after paying for essentials, and almost a quarter (22%) saying they only have up to 20% left at the end of the month.
However, when this is compared to the responses from all consumers, there has been a slight uptick from 47% feeling financially comfortable a year ago, to 49% in 2024.
“[The] decision to hold the interest rate at 5.25% is a blow to consumers and the housing market,” said Robyn Duffy, senior analyst at RSM UK.
“Gen Z in particular are suffering on this front, with house purchases feeling further out of reach than ever, and the rental market seeing increasing competition as prospective tenants bid for accommodation in some parts of the country. This is all taking a hit on their willingness to spend.”
