In the latest survey, UK consumer sentiment reached its highest level since November 2021, indicating a more positive outlook on the economy despite personal financial concerns. The GfK consumer confidence survey, a key measure of British sentiment, rose to -14 in June from -17 in May. The development exceeded the expectations of economists consulted before the release.
The survey, which has been tracking consumer sentiment for over two-and-a-half years, reflected a significant recovery from the all-time low of -49 recorded in September 2022. At the time, the UK was facing rising energy prices. This pushed inflation to a 41-year low of more than 11%. However, inflation has returned to the 2% target, which has contributed to a gradual rise in sentiment.
Despite the positive trend, the situation of many families continues to be challenging due to the continuing cost of living crisis. Joe Staton, director of customer strategy at GfK, said that while the third consecutive month of rising confidence is a good sign, the overall negative score highlights the financial difficulties many households are experiencing.
The survey breakdown shows a 7-point increase in the assessment of general economic conditions over the past 12 months and a 6-point increase in the economic outlook for the next year. However, for the personal financial outlook, sentiment has declined by 3 points since May, and the outlook for financial conditions has remained stable over the past year.
With elections on July 4, the country's fiscal situation is an important issue. Current polls suggest that a majority of Britons want higher taxes, regardless of whether Labor or the Conservatives are elected. Economists predict the UK's overall tax burden, already the highest since 1949, will continue to rise. This is due to factors such as slow economic growth, high interest payments on loans and increased demand for public services.
Reuters contributed to this article.
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