Consumer confidence falls slightly as UK shows ‘resilience’ in face of recession

After reaching a two-year high at the start of the year, UK consumer confidence declined slightly in February, according to GfK’s monthly Consumer Confidence Barometer.

Across four of the five measures, consumer confidence has declined, with only respondents’ perception of their personal financial situation over the next 12 months staying stable at o points (+0). The overall index score suffered a two point decline back to -21 points.

Consumer confidence in personal financial situations over the last 12 months declined by two points (-14) returning to its pre-January level.

Confidence in the general economic situation over the last 12 months also declined by two points (-43). Meanwhile, confidence in the general economic situation for the next 12 months, declined by three points to -24.

The major purchase index fell by five points to -25 points.

Consumer confidence reaches two-year high after ‘surprise’ boostJoe Staton, client strategy director at GfK, describes this as a “mixture of bad news and good news”.

“The bad news is that the improvement in the Overall Index Score seen over recent months stalled slightly in February due to a fall across most measures. However, the good news is that optimism for our personal financial situation for the next 12 months has not slipped back,” he says.

Marketers know they “need to be patient” with the situation, he adds, noting we’re not far removed from the all-time low score of -49 seen in September 2022, the lowest since records began in 1974.

With the underlying trend pointing to slow improvement in the consumer mood, monthly slips are a normal part of the longer-term picture.

Joe Staton, GfK

“Today, we are at -21 and no matter how you interpret trends, that’s an improvement,” he adds.

Staton accepts the “core challenges” of high interest rates and other factors driving the cost-of-living crisis have not gone away. But he points out that “consumers have shown clear resilience” and that even the appearance of the words “technical recession” in the headlines isn’t sending confidence tumbling.

He adds: “With the underlying trend pointing to slow improvement in the consumer mood, monthly slips are a normal part of the longer-term picture. As time goes by, measures for moving us into a more stable economic environment should hopefully strengthen consumer confidence. As long as the underlying positive trend has not suddenly reversed, patience will pay off.”