I did think it was a little strange to see consumer confidence improving last month when all around we saw negative stories. The latest consumer confidence index saw the lowest figure since November 2023. I think there is a realisation that the current government hasn’t got the answers to a number of key questions.
“The GfK Consumer Confidence Index in the United Kingdom dropped by 5 points to -22 in January 2025, marking its lowest level since November 2023. This decline signals growing concerns over an economic slowdown. January's figure also significantly missed forecasts of -18, and reflected the sharpest monthly drop between December and January since 2011. All five components of the survey saw a decrease, driven by softening economic expectations. In addition, a rise in GfK’s savings index—although not part of the overall consumer confidence index—pointed to increased caution among households. The drop in confidence also highlights the impact of the government’s decision to raise taxes on businesses to fund investment and public services. This weakened sentiment supports a dovish outlook for the Bank of England, with market expectations now leaning toward an interest rate cut in February. source: GfK Group”
Business Confidence in the UK took an even greater hit:
“Sentiment in the UK manufacturing sector dropped sharply to -47 in January 2025, marking its steepest decline in over two years, according to the Confederation of British Industry (CBI). Manufacturing output decreased, and new orders fell, especially for exports, which saw their fastest drop since 2020. Manufacturers expect these trends to worsen in the next quarter. Increased cost pressures were reported, and inflation in both domestic and export prices is expected to rise significantly. Investment intentions also worsened, with manufacturers cutting back on spending across all categories due to demand uncertainty, poor returns, and lack of internal finance. Hiring outlooks have weakened, with employment expected to decline at the fastest rate since July 2020. Many manufacturers are concerned that negative sentiment could be self-fulfilling and urge the government to support the sector with clearer policies. source: Confederation of British Industry”
Graphic from Trading Economies a great source of economic information from 196 countries
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