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An improved economic outlook helped UK consumer confidence rise in May, reversing most of April’s tariff-induced drop and pointing to steadier spending trends.
The GfK consumer confidence index — a measure of how people view their personal finances and broader economic prospects — rose three points to minus 20 in May, the research group said on Friday. It took the score back to the level recorded in February but remained well below the 2015-2019 average of minus 5.6.
The rise in May was driven by improved sentiment about the economic outlook and personal finances, suggesting households may be regaining some willingness to spend. Household consumption, which makes up about 60 per cent of UK GDP, contributed little to first-quarter growth despite the economy expanding by 0.7 per cent.
Neil Bellamy, consumer insights director at GfK, said consumers may have taken comfort from the Bank of England’s quarter-point interest rate cut in May, and “breathed a tiny sigh of relief” since the turbulence caused by US President Donald Trump’s tariffs in April and the warnings of a return to inflation.
“Those dangers, especially the issue of inflation, have not disappeared, but the consumer mood in the UK does appear to have improved a little,” added Bellamy.
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GfK’s survey, with responses collected in the first half of May, reflects consumer perceptions of news events such as the BoE rate cut and the UK signing trade deals with the US and India, as well as talks with the EU. However, data published this week showed that inflation rose more than expected to 3.5 per cent in April, prompting traders to cut expectations of further rate cuts.
The survey’s outlook for personal finances rose 5 points to 2, while the outlook for the economy in the year ahead rose 4 points to minus 33.
It also showed a higher proportion of people saying they felt it was a good time to spend on big items such as furniture or electrical goods, while savings intentions dropped.
A separate consumer survey published on Thursday by the British Retail Consortium also showed a rise in the proportion of people expecting the economy to improve in May compared with the previous month. A larger proportion of people also expected better personal finances.
BRC chief executive Helen Dickinson said: “Only weeks ago, consumers were facing uncertainty arising from President Trump’s announcement of eye-watering tariffs on many countries. Fast forward to today, the UK has trade deals with some of the world’s largest economies.”
