Consumer confidence in the UK shows a minor improvement but remains weak, raising concerns over economic activity during the festive period.
- The GfK consumer confidence index increased by a single point, landing at -17 for December, showing slight positive movement.
- Public perception of personal finances has improved slightly, with forecasts for the next year moving into positive figures.
- Major purchases are still viewed cautiously, reflecting consumer hesitation despite stronger Black Friday sales.
- Frasers Group CFO notes increased uncertainty around economic conditions following recent government budget announcements.
Consumer confidence in the UK saw a marginal improvement this December, inching up by one point according to the latest GfK index, yet the public remains wary due to the persistent negative outlook on the overall economic environment. The index now stands at -17, reflecting ongoing caution amongst consumers.
A notable improvement is seen in the perception of personal financial situations, with the index for personal finances rising by two points over the past year, now standing at -7. Furthermore, forward-looking assessments for personal finances over the next 12 months have tipped into positive territory, reaching +1, indicating a modicum of optimism about individual economic prospects even amidst broader concerns.
Despite these slight gains, there is an evident reluctance amongst consumers to commit to major purchases, with the index for such expenditures remaining stable at -16. This reticence persists regardless of a successful Black Friday, where sales in technology, homeware, and seasonal products saw a 1.8% increase in value and a 7.7% rise in volume compared to the previous year, showcasing significant consumer engagement during sales events.
Neil Bellamy, GfK’s Consumer Insights Director, remarked on the relative stability of consumer confidence through 2024, despite the fluctuations seen in previous years. The most significant impact noted this year was post-General Election, where initial optimism was quickly dampened, resulting in a seven-point drop in confidence as governmental economic messages unsettled consumers.
The situation is further compounded by budgetary concerns, with Frasers Group CFO Chris Wootton observing a noticeable weakening in consumer sentiment preceding and following the recent budget. He attributed this to the continuous stream of negative news surrounding economic policies, which he described as having ‘spooked’ consumers. This, in turn, prompted a downward revision of profit expectations, linking the sentiment closely to financial performance indicators.
Overall, while consumer confidence shows slight signs of improvement, persistent economic concerns continue to overshadow the festive outlook, challenging retailers further.
