Consumer confidence improves in early sign that ‘the worst has passed’
Three major measures of consumer confidence all found an improvement in Brits’ economic sentiment in May, promoted by easing trade tensions and a cut in interest rates.
GfK’s long-running Consumer Confidence Index increased by three points to -20 in May after dropping in ‘Awful April’ on inflation fears.
“The measure for personal finances looking ahead for the next 12 months has moved out of negative territory… there’s a similar improvement in how consumers see the coming year’s general economy,” consumer insight director at GfK, Neil Bellamy, said.
“[Economic] dangers – especially the issue of inflation – have not disappeared but the consumer mood in the UK does appear to have improved a little,” Bellamy added.
Consumers were also spooked by the sudden turbulence of the Trump Tariffs in April, which prompted stark warnings of inflation of an economic downturn.
BCG’s Consumer Sentiment Snapshot similarly showed signs of improving consumer sentiment in May.
“For the first time this year, people are more likely to think that their personal finances will improve in the next six months than worsen.
“There are some early signs that the negative consumer sentiment is starting to ease and that the worst has passed,” Raoul Ruparel, Director for BCG’s Centre for Growth, said.
Ruparel warned that it would take a while for the minor improvement in confidence to filter into the economy given the UK’s historic reliance on consumer-driven growth, but said aggregate spending on essentials and discretionary items is going in the right direction.
Helen Dickinson, chief executive of the British Retail Consortium, pointed out that while easing geopolitical tensions and an economic boost helped confidence, sentiment remains more negative than this time last year.
“While agreements with the US and India may have helped this month’s boost in consumer confidence, it is hoped the latest EU deal will drive further confidence in the outlook for the economy and personal finances,” she said,
“There is more the UK can do to encourage spending and trade: reintroducing a tax-free shopping scheme would attract more high-value shoppers from abroad, benefitting retail, hospitality, and leisure, and creating employment opportunities and boosting economic growth”.