The UK economy continues to grapple with low consumer confidence, although recent data suggests a slight improvement. According to GfK, the Consumer Confidence Index rose by one point to minus 17 in December 2024, indicating a minor uptick in sentiment despite ongoing economic concerns [42a2e0f9]. Notably, the outlook for personal finances improved to plus one, a three-point increase from the previous year, while expectations for the overall economy remained static at minus 26, down one point from December 2023 [42a2e0f9].
This increase in consumer confidence follows a tumultuous year, where 2024 saw an eight-point difference in confidence scores compared to a staggering 23 points in 2023 and 30 points in 2022 [42a2e0f9]. Neil Bellamy, GfK’s consumer insights director, acknowledged that while consumer confidence is still weak, there are signs of optimism emerging among households [42a2e0f9].
Earlier in the year, the UK faced significant challenges as consumer confidence had fallen to minus 21 in October 2024, reflecting growing concerns ahead of Labour's first budget [604b4ec5]. The budget, which aimed to address a £22 billion 'black hole' in public finances, included proposals that could leave up to 10 million pensioners up to £300 worse off due to potential cuts to winter fuel payments [a962ded7].
Despite a modest rise in retail sales volumes by 1% in August, consumers remained cautious about making significant purchases, as indicated by a recent S&P Global survey showing that private-sector investment was on hold [604b4ec5]. The Investor Confidence Index had also dropped by 10 points earlier in the year, reflecting concerns about rising capital gains tax bills and potential pension reforms [abd156f5].
Asos's plans to sell a 75% stake in Topshop for £180 million and Royal Mail's decision to scrap second-class post on Saturdays highlighted mixed signals within various sectors of the UK economy [58d4d661]. The British Chambers of Commerce had forecasted a slowdown in GDP growth, further complicating the economic landscape as the UK navigated these challenges [3387ac19][58d4d661].
As we close out 2024, the data suggests that while consumer confidence remains low, there are emerging signs of recovery that could influence spending patterns in the new year.