British consumers felt increasingly optimistic in December, heralding good news for spending as the country heads into the crucial festive shopping season, a closely watched survey showed on Friday.
The Consumer Confidence Barometer from research group GfK rose by two points to minus 22 in December, continuing the recovery that started in November. This was only slightly below expectations for a figure of minus 21, according to economists polled by The Wall Street Journal ahead of the study’s release.
While the index remains firmly in negative territory, consumers are clearly more optimistic, noted Joe Staton, GfK’s director of customer strategy. High interest rates and price increases are still eroding disposable income, he said.
“Despite the severe cost-of-living crisis that continues to impact most households, this slow but sustained move toward positive personal finance territory is an encouraging sign for the year ahead,” Staton said.
“The nation’s confidence is still firmly in negative territory, [but] Optimism about our personal finances for the next twelve months shows a remarkable recovery after the depressive periods [level] reported this time last year,” Staton said. In December 2022, the GfK barometer showed a sharper negative value of minus 42.
All five components of the index, which measure sentiment around personal and general financial background, as well as confidence to make major purchases, were higher in December. The apparently more positive mood among British consumers will increase hopes for a boost in sales at the end of the year, a crucial period for British retailers. Retail sales fell in October, according to the latest data from last month, although some economists remain hopeful that consumers are saving their spending before the end of the year.
A revival in consumer spending would provide much-needed support to the wider UK economy. Gross domestic product fell more than expected in October, figures showed this week, and some economists warn the economy is heading for a recession without a sharp recovery in the final months of the year and into 2024. A technical recession is over generally defined as two consecutive quarters. of negative growth.