UK Consumer Confidence Hits Five-Month High Despite Ongoing Economic Worries

British consumer confidence improved in January, reaching its highest level since August 2024, as households became more optimistic about their personal finances even while concerns about the wider UK economy persisted. According to a long-running survey released Friday by market research firm GfK, the consumer confidence index rose to -16 in January, up one point from December and in line with expectations from a Reuters poll of economists.

Although the improvement was modest, it marked a notable shift in sentiment after months of fragile morale. GfK noted that Britain’s consumer confidence has not been in positive territory for more than a decade, last doing so ahead of the 2016 referendum on leaving the European Union. This highlights how deeply entrenched caution remains among UK households despite short-term gains in confidence.

The January survey showed mixed results across its components, with three out of five measures of confidence declining. Most notably, consumers remain pessimistic about the broader economic outlook. An index tracking expectations for the UK economy over the next 12 months fell by two points to -31, underscoring continued anxiety about growth, inflation, and stability. In contrast, expectations for personal finances improved sharply, rising four points to +6, suggesting households feel better positioned to manage their own budgets.

Neil Bellamy, consumer insights director at GfK, said consumers are increasingly focusing on factors within their control, such as spending and saving, while remaining wary of national economic conditions. He described the UK economy as appearing “like an untethered boat drifting slowly out to sea” in the eyes of many consumers.

Britain’s economic backdrop remains challenging. Economic growth has been sluggish, inflation rose last month for the first time since July, and wage growth has eased. However, Bank of England Governor Andrew Bailey has indicated inflation could return close to the central bank’s 2% target by April or May, offering some reassurance.

Meanwhile, official data due later Friday is expected to show a 0.1% decline in monthly retail sales for December, reflecting continued pressure on consumer spending. The GfK survey was conducted between January 2 and January 15 among 2,002 respondents across the UK.