With consumer confidence rebounding by six points to -17 in July, Britain's households are displaying a marked increase in optimism not seen since January. This significant uplift in sentiment is primarily driven by the prospect of a new Prime Minister, buoyed by Andy Burnham's election victory on 18 June and reinforced by England's strong World Cup performance.
Data from GfK reveals that its Consumer Confidence Index has recorded its largest monthly rise since November 2023, with eight points added to consumers' outlook for the economy over the next year. Moreover, their assessment of the previous year's economic performance has seen a ten-point increase. Neil Bellamy, consumer insights director at GfK, credits this wave of optimism to the prospect of a fresh start under a new Prime Minister and hopes for stabilisation in the Middle East, which could lead to lower fuel prices.
While personal financial situations have become slightly more optimistic, with an increase of only two points, all five indices within GfK's report showed improvement. However, Bellamy cautions that current index scores remain below levels seen a decade ago, prior to the 2016 Brexit referendum, when consumer confidence was last in positive territory.
The long-term viability of this 'Burnham bounce' will depend on the new government's ability to effectively address persistent cost-of-living challenges and low economic growth. Ongoing developments in the Middle East, including the re-escalation of the US conflict with Iran, have led to a sharp increase in Brent crude oil prices to $100 per barrel, potentially complicating efforts to ease inflationary pressures.