UK Consumer Confidence Rise Hints at "Green Shoots of Recovery" says GfK

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The GfK Consumer Confidence Barometer posted a third consecutive monthly gain in April as it reached its highest level since February 2022.

Consumer confidence was at -30 in April, a rise from a record low of -49 last September, said GfK, which has been running this survey since 1974.

"There's a sudden flowering of optimism with big improvements across the board," says Joe Staton, Client Strategy Director at GfK.

Consumers were more optimistic both about their own finances and the general economic situation.

"The brighter views on what the general economy has in store for us, with April’s six-point rise cementing a 20-point improvement since January, could even be seen as the proverbial 'green shoots of recovery'," says Stratton.

GfK recorded an eight-point jump in how consumers see prospects for their personal financial situation. Stratton says this is a "dramatic change that might suggest household finances are stronger than we thought."

The findings are further evidence that the UK economic outlook is not as gloomy as the consensus had predicted at the start of 2023.

Indeed, data from the ONS this week revealed the economy remains underpinned by a healthy labour market, even if real wages continue to decline in the face of rising inflation.

But inflation is forecast to fall sharply over the coming months by the majority of economists which will likely see real wages start to rise again.

"The real wage story, if we look at it crudely by simply taking headline inflation from weekly earnings growth, is set to improve dramatically over coming months. Currently around -4% on a year-on-year basis, this measure of real wages is set to turn slightly positive by year-end," says James Smith, Developed Markets Economist at ING Bank.