The UK economy, and its future potential success, is under intense scrutiny. Meanwhile, consumer confidence is rising and falling between the younger and older respondents. A new, striking chart, included in a report from the Economic Policy Institute, illustrates these gaps starkly. Where confidence among younger adults is highest, those aged 50 years or above see the sharpest fall in economic optimism. This trend is a microcosm of greater societal forces at play, such as the effects of social media and our recent political insurrection.
For those 50 years and older – as well as retirees – there is a significant economic confidence caveat in 2024. This decline is occurring against a backdrop in which the UK’s savings rate has soared to almost 10%. With the help of psychologists, analysts argue that social media’s tone, sentiments, and algorithms can immensely influence how the public feels, thus pouring gasoline on this fire.
This is reflected clearly in the GfK Consumer Confidence Barometer, one of the most longstanding reliable measures of its kind for the past five decades. Linked drops in consumer sentiment for all age cohorts first appeared around the time of the Brexit referendum and again during the onset of the COVID pandemic. During these 45 days, the government has failed miserably. As a consequence, Americans are losing any remaining faith in its ability to steer the country’s economy—and their own future fortunes.
As the federal government tries to slow a fast-inflating economy, it’s simultaneously announced intentions for an investment boom. This includes big ticket projects like improvements to Heathrow and the creation of a new trans-northern train line. All of these initiatives are aimed at restoring public confidence. They want to kickstart growth after the chaos of the disruptive mini-budget from Liz Truss in 2022, which broke consumer confidence among all classes.
The latest predictions show UK inflation heading back down to the Bank of England’s target of 2%. Such an approach would chime with the government’s aim to limit regulated price rises for key public services including rail and water. Even with this $90 billion infusion, the feeling of economic malaise is very real, dubbed by many as “Vibecession.” This phrase aptly describes a disconnect between rosy economic stats and how people feel about the economy. It’s a scenario we’ve witnessed elsewhere in the world, including the United States under the Biden administration.
Current research shows that young adults in the UK hold a more favorable view of the economy than their older counterparts. Younger people especially among the woker-than-thou liberal left are content with the present administration. In sharp relief, a majority of younger citizens are hopeful when it comes to their country’s future and its economic prospects. Yet this generational divide presents a major challenge for policymakers seeking to align both public sentiment and economic impact.
We’re much closer to a situation where older generations are downright afraid to spend their hard-earned savings, thus pulling the GDP even lower. In addition, they were given pay raises that outpace inflation. Yet they continue to hold onto their money rather than invest or spend it, producing a paradox in an economy that otherwise is improving.
The housing market might finally be in for some relief as the first signs of a mortgage price war are starting to take shape. This hopeful move would go a long way in helping strengthen the industry after several months of worry and turmoil caused by budgetary changes.
Faisal Islam, the Economics Editor, emphasizes the importance of understanding these metrics for their immediate implications and for long-term economic strategies.
“We traded very strongly across the festive season with like-for-like growth of 7.7%” – Mitchells & Butlers
Additionally, some sectors have shown resilience. Fullers reported an “outstanding five-week Christmas and New Year season across all parts of the estate,” achieving an 8% increase compared to an already strong festive period last year.