UK client confidence noticed a marginal enchancment in March, rising by only one level to -19, in line with the most recent GfK index.
Whereas the determine beat analysts’ expectations of a fall to -21, specialists warned there’s nonetheless “little evidence of a recovery” as households stay cautious within the face of persistent financial pressures.
The slight uptick was largely pushed by a extra constructive view of the economic system’s efficiency over the previous yr and cautious optimism for the yr forward. Nonetheless, the survey was performed earlier than the Workplace for Nationwide Statistics (ONS) revealed that GDP shrank by 0.1 per cent in January, tempering hopes of sustained momentum.
Though the patron confidence index has recovered considerably from its document lows through the peak of the price of residing disaster in late 2022, it stays properly under the long-term common of -10.
Neil Bellamy, client insights director at NIQ GfK, likened the present state of sentiment to a hospital affected person. “Consumer confidence remains subdued… If [it] were a patient languishing in a hospital bed, a doctor would say there is little evidence of a recovery as yet,” he mentioned.
Shopper sentiment is a important barometer for economists, reflecting public perceptions of family funds, job safety, and the broader financial local weather. Regardless of wage development outpacing inflation for the previous 18 months, March noticed a slight dip in private finance expectations for the yr forward.
GfK’s separate financial savings index additionally fell, dropping 5 factors to 25, which may counsel that some households could also be keen to dip into financial savings to take care of spending — a doubtlessly short-term enhance for retailers however an indication of longer-term monetary pressure.
The Financial institution of England, in the meantime, held rates of interest regular at 4.5 per cent final week, with the Financial Coverage Committee voting 8-1 in favour of no change. Regardless of three price cuts for the reason that peak of 5.25 per cent final yr, borrowing prices stay considerably greater than the degrees seen over the previous decade and a half — incentivising saving over spending.
Retail gross sales rose 1.7 per cent in January, in line with the ONS, however enterprise sentiment has began to falter. Separate indicators, together with the Buying Managers’ Index, have proven weakening confidence amongst employers and a slowdown in hiring intentions — partially attributed to Chancellor Rachel Reeves’s £25 billion improve in nationwide insurance coverage contributions for employers.
Additional strain on client sentiment could come from wider geopolitical developments. The Financial institution of England this week warned that renewed tariff threats and protectionist alerts from US President Donald Trump had “intensified” world uncertainty, heightening market volatility and posing dangers to UK development.
With Reeves anticipated to announce extra public spending cuts in Wednesday’s Spring Assertion to shore up fiscal headroom, the approaching months could check the resilience of each family confidence and broader financial restoration.
