Consumers are more confident about their personal finances – but the overall state of the UK economy remains poor, according to a closely watched survey.
Inflation falls and the latest from the Bank of England Decision to reduce interest rates Commentators stated that attitudes may be key factors in change.
The month of July General election It is also believed to have provided a greater sense of political certainty.
GfK’s long-term consumer confidence index, based on a survey of 2,000 adults between August 1 and August 15, showed a four-point drop in expectations over the next 12 months. UK economy.
It was the first drop in national economic confidence in six months, down from -11 in July on the Market Research Institute’s index of -15.
However, when it came to the respondent’s expectations about their personal financial situation in the next 12 months, the score rose from +3 in July to +6 in August.
Linda Ellett, UK Head of Consumer, Retail and Leisure KPMGSaid: „Consumer confidence is gradually recovering, with more inflation stabilizing, the first cut in interest rates since 2020, and the election providing political certainty.”
However, he added: „While there were welcome signs of seasonal summer spending for the retail sector leading to sales growth in July, the upturn was limited.
„Household finance remains highly volatile and there is still little evidence that a gradual increase in overall consumer confidence will lead to a sustained and significant improvement in discretionary spending.”
’We face big challenges in the economy’
The survey results come despite the latest official figures pointing to a gradual decline Improves perspective For the UK economy.
Retail sales rose 0.5% in JulyAfter contracting 0.9% in June, GDP It increased by 0.6% between April and June.
However, the The number of companies going out of business has increased by 16% Year-on-year in July indicates that many businesses are still recovering from the impact of high inflation and borrowing costs in recent years.
Personal finances may also suffer later this year Rising energy prices, As some commentators fear.
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Joe Staton, GfK’s director of customer strategy, acknowledged that the recent „mortgage-friendly” reduction in interest rates – There is hope for more to come – may have led to a more positive outlook.
He said consumer confidence in making big purchases in the coming year had also increased, which he described as „great news”. Retailers„.
Mr Staton added: „The broad point is that all the key numbers this month are significantly more encouraging than they were 12 and 24 months ago.
„But as we move into the fall and winter, how much will this slow improvement in the nation’s mood last?”
Overall consumer confidence, which includes both personal finances and expectations about the broader economy, firmed in August at a score of -13 on GfK’s index, similar to the previous month.