UK consumer confidence has shown signs of recovery in May, according to the latest BRC-Opinium Consumer Sentiment Monitor. Expectations for the state of the economy over the next three months improved to -36, up from -48 in April.
Similarly, consumers' outlook on their personal financial situation rose to -12, compared to -16 the previous month.
However, anticipated spending on retail declined to 0, down from +3 in April, while overall personal spending expectations remained steady at +10. Personal saving expectations dipped slightly to -5, from -4 in April.
These shifts in consumer sentiment coincide with a period of easing geopolitical tensions and modest economic growth in the UK.
The recent de-escalation of the US-China trade conflict and the UK's new trade agreements with major economies, including the US and India, may have contributed to the improved outlook.
Helen Dickinson, Chief Executive of the British Retail Consortium, commented on the developments: "While agreements with the US and India may have helped this month’s boost in consumer confidence, it is hoped the latest EU deal will drive further confidence in the outlook for the economy and personal finances."
Older generations show notable improvement in confidence
The over-60s demographic experienced the most significant increase in economic optimism, with their confidence levels rising nearly 20 points.
Despite this improvement, they remain the most cautious age group regarding economic prospects.
This uptick may be linked to recent stock market recoveries following previous volatility triggered by international trade tensions.
Retail spending expectations decline
Despite the overall rise in consumer confidence, expectations for retail spending have decreased.
The anticipated retail spend fell to 0 in May, down from +3 in April, indicating a more conservative approach to discretionary spending.
This trend suggests that consumers may still be exercising caution in their spending habits, possibly due to lingering uncertainties in the economic landscape.
Calls for policy measures to support consumer spending
In light of the current economic climate, there are discussions around potential policy measures to stimulate consumer spending.
One proposal is the reintroduction of a tax-free shopping scheme aimed at attracting high-value shoppers from abroad. Such a measure could benefit the retail, hospitality, and leisure sectors, potentially creating employment opportunities and boosting economic growth.
As Helen Dickinson noted, "There is more the UK can do to encourage spending and trade: reintroducing a tax-free shopping scheme would attract more high value shoppers from abroad, benefitting retail, hospitality, and leisure, and creating employment opportunities and boosting economic growth."
