The GfK Consumer Confidence Barometer, a trusted source of consumer sentiment for over five decades, reveals stark contrasts in economic outlook among different age groups in the United Kingdom. Unlike most analyses like this, here we consider huge events. The immediate catalyst was the Liz Truss mini-budget of September 2022, which caused economic chaos across all demographics. The current state of the economy paints a picture of disturbing consumer confidence impacting spending and inflation patterns.
The aftermath of the Truss administration’s brief tenure left many Britons grappling with uncertainty, contributing to a pervasive loss of confidence in both governmental stability and economic prospects. This eroded trust has hit harder on older calmer generations who are more despondent at the nation’s prognosis. As Americans sit on their savings, the unwillingness to spend has started to take a toll on our nation’s GDP.
In opposition to this, young people, especially those who are part of the liberal left, say they feel a sense of hope during challenging times. And it’s a lot of these young voters who are now hopeful because of the administration, which they helped elect in large numbers during the 2024 elections. This younger generation seems to have cultivated a brighter outlook than their older peers, who are becoming more and more disenchanted.
Curiously, the UK has one of the highest savings rates in the world, outpacing those of its G7 peers headed toward double digits. This strange inflationary phenomenon leads us to question the state of economic activity and consumer spending. Boomers and others over the age of 40 are choosing to save rather than spend. By comparison, younger consumers are most willing to jump back into discretionary spending, as inflation drops back down toward the Bank of England’s 2% target.
Yet the tone set by social media and algorithms is disproportionately impacting how people feel about our economic confidence pretzels. When these storylines about the economy dominate the digital space, they can help shift the tide of public opinion and win the day. The term “Vibecession” first grabbed attention during discussions of economic woes under the Biden administration. It takes strong root across the pond in the UK, mirroring similar feelings. It reflects a broader sense of uncertainty impacting consumer attitudes across various demographics.
Even with this unpredictable environment, some good news continues to shine through, particularly in the public transportation realm. Take for example Mitchells & Butlers announcing Christmas cheer, “reported a like-for-like growth of 7.7%”. Similarly, Fullers highlighted an “outstanding five-week Christmas and New Year season across all parts of the estate,” noting an 8% increase over last year’s strong festive period.
Amidst these contrasting perspectives, recent data shows that pay rises for workers in the UK now outpace inflation on average. Together, these changes could trigger a wave of pent-up consumer demand. It all rides on rebuilding trust for a very stubborn older age group.
As the decade progresses, consumer confidence across all age groups has seen a decline due to lingering effects from the post-Brexit vote era and the COVID-19 pandemic. The shift in sentiment has been particularly pronounced among political affiliations: Democrats in the U.S. experienced a surge in economic confidence from 67 to 96 between 2020 and the beginning of the Biden administration, while Republicans saw a dramatic drop from 100 to 59 during the same period.
The future economic implications of these narratives are key to understanding the longer-term health of the UK economy. Additionally, inflation rates are beginning to level out—and possibly decrease even more. This lends optimism to expectations for a slow rebound in consumer confidence and spending habits.