Consumer confidence in the UK has modestly increased by one point in December but remains cautious due to economic concerns.
- GfK’s consumer confidence index improved slightly, reflecting better forecasts for personal finances compared to last year.
- The major purchase index remains unchanged, indicating hesitancy in buying expensive items.
- Despite a boost from Black Friday sales, overall sentiment is affected by the general economic situation.
- Government messaging and economic challenges post-UK General Election have notably impacted public confidence.
Consumer confidence in the UK has seen a slight increase, with GfK’s index rising by one point to -17 in December. This modest uplift reflects some improvement in public sentiment towards personal financial situations, which have improved by two points over the past year.
Forecasts for personal finances over the next 12 months have moved into positive territory, rising by two points to +1, suggesting a cautious optimism. However, the general economic situation over the past year remains unchanged at -39, highlighting ongoing concerns about the economy.
The major purchase index, a measure of confidence in buying big-ticket items, has not shifted and remains at -16. Concurrently, the savings index has dropped by three points to +21, indicating a reluctance to spend despite some positive financial forecasts.
Black Friday 2024 provided a temporary boost to retail with a 1.8% increase in sales value for technology and durable goods, and a 7.7% rise in volume compared to the previous year. The total turnover for Black Friday week was significantly higher than the yearly average, reaching £992 million.
GfK’s Neil Bellamy notes that while 2024 saw fewer fluctuations in consumer confidence compared to previous years, the UK General Election had a significant impact, causing a seven-point dip in confidence in September. This decline was due to unsettling government messages about the economic challenges ahead.
Frasers Group CFO, Chris Wootton, observed a noticeable weakening in consumer sentiment pre- and post-Budget, with negative economic narratives further dampening confidence. This reflects tougher trading conditions, as seen in Frasers Group lowering its profit expectations by £25 million.
In summary, while there has been a slight improvement in consumer confidence, ongoing economic challenges and government messaging continue to create caution across the UK.
