U.K. consumers felt increasingly optimistic in December, heralding good news for spending as the country enters the vital festive shopping season, according to a closely watched survey set out Friday.
Research group GfK’s Consumer Confidence Barometer ticked up two points to minus 22 in December, continuing a rebound that started in November. This was only slightly short of expectations for a reading of minus 21, according to economists polled by The Wall Street Journal ahead of the survey’s release.
Though the index remains firmly in negative territory, consumers are clearly feeling more optimistic, GfK client strategy director Joe Staton noted. High interest rates and price rises are still eating into disposable income, he said.
“Despite the severe cost-of-living crisis still impacting most households, this slow but persistent movement towards positive territory for the personal finance measure looking ahead is an encouraging sign for the year to come,” Staton said.
“The nation’s confidence is still firmly in negative territory, [but] optimism for our personal finances for the next 12 months shows a notable recovery from the depressed [level] reported this time last year,” Staton said. In December 2022,the GfK barometer showed a more sharply negative reading of minus 42.
All five of the index’s components, gauging sentiment around personal and general financial backdrop as well as confidence to splash out on big-ticket purchases, ticked higher in December. The apparently brighter mood among U.K. consumers will boost hopes of an increase in sales at the end of the year, a vital period for U.K. retailers. Retail sales slipped backward in October, according to the most recent data set out last month, though some economists remain hopeful that shoppers are saving their spending for the end of the year.
A pickup in consumer spending would offer much-needed succour to the wider U.K. economy. Gross domestic product fell more than expected in October, figures showed this week, and some economists warn that the economy could be headed for recession without a sharp recovery in the year’s last months and into 2024. A technical recession is generally defined as two successive quarters of negative growth.