Optimism over the health of the UK economy has slipped for the first time in five months, prompting consumers to prioritise saving over spending, a long-running survey suggests.

The GfK consumer confidence index, which has been published since the 1970s, held steady over the past month at -13, still above the long-term average of -18. The figure was lower than City analysts’ forecasts.

Mounting concerns about the trajectory of the economy over the coming year constrained consumer confidence. GfK’s economic optimism index dropped by 4 points to -15, the first decline since February. Households were also less convinced about the economy’s performance over the past 12 months, which included a recession.

Despite that contraction in growth expectations, households are less worried about the state of their personal finances in the coming year, with GfK’s budget index up by 3 points to +6.

Joe Staton, client strategy director at GfK, attributed this strengthening in consumers’ perception of their personal finances to “a mortgage-friendly interest rate cut at the beginning of August — and hopes of more to come”. The Bank of England lowered the base rate for the first time since March 2020 on August 1, bringing borrowing costs down to 5 per cent from 5.25 per cent.

Financial markets expect the central bank to loosen borrowing costs twice more this year, each time by quarter point increments.

The savings index climbed by 6 points to 33, illustrating that households continue to prefer banking pay increases, and capitalising on higher interest rates, rather than increasing retail spending. Economic uncertainty has also kept the savings rate elevated.

Consumers’ sentiment toward the economy and their own personal situation has gathered momentum over the last two years. In August 2022 the confidence index stood at -44 and it was -25 in August 2023.

Staton said: “The wider point beyond the contrasts is that all the key numbers this month are significantly more encouraging than 12 and 24 months ago.”

GfK’s index slid to its lowest level ever of -49 in September 2022, the same month that Liz Truss and Kwasi Kwarteng delivered their calamitous mini-budget which roiled financial markets and put upward pressure on mortgage rates.