Retrospective scores for business activity over the previous month dipped from 115.4 to 109.6, which was the largest month-on-month drop since April 2020.

January also saw the outlook for future business activity for the year ahead fall from 126.9 to 122.5, which was the largest month-on-month drop since August 2022.

The findings follow YouGov data published last month that suggested that eight in ten Britons believed the UK economy was in a bad state.   

The overall score for the consumer confidence index fell from 112.5 to 111.1, with any score of 100 or more indicating positive consumer sentiment. The results are based on monthly interviews with 6,000 consumers.

Employees were more likely to report an improved sense of security over the past 30 days, with scores rising from 114.3 to 115.4, but outlook declined from 119.2 to 117.6.  

Household finance measures went from 95.3 to 92.7, which was the largest month-on-month drop since August 2022, while scores for the next 12 months rose from 99.9 to 100.7, re-entering positive territory for the first time since July 2024.  

Perceptions of house prices over the past 30 days fell from 119.2 to 117.6, while outlook fell from 131.6 to 131.4.

Christopher Breen, head of economic insight at Cebr, said: “The UK economy was hit by the January blues in the new year, as a combination of poor data outturns and ongoing concerns about the impacts of upcoming tax changes dampened the economic mood music. Consumers have clearly internalised these developments, with confidence over backward- and forward-looking business activity falling sharply.

“However, consumers are not yet translating these concerns into fears over their own situations, with forward looking job security and household finances confidence remaining robust. With employment looking like it might be entering a downturn, it remains to be seen if consumers are at all over-optimistic.”

Will Ullstein, UK chief executive officer at YouGov, said: “YouGov’s consumer confidence index is an aggregate of several individual measures. The big drops in perceptions of business activity are obviously a cause for concern. We will be watching next months’ figures closely to see if a trend is developing.”