UK Consumer Confidence Sees Slight Uptick Following BOE Rate Cut

UK consumer confidence saw a modest improvement in February, according to a recent survey by GfK, cited by The Wall Street Journal. This follows the Bank of England's decision to cut its key interest rate earlier in the month.

The monthly GfK survey showed consumer confidence rising to minus 20 in February, up from minus 22 in January. This result exceeded economists' predictions of a flat reading, and marked an improvement from January's figure, which represented the lowest consumer sentiment since August 2023.

The most significant improvement was observed in consumer perceptions of their personal finances over the coming year. In contrast to the previous month, where all five components of the survey showed declines, this month saw increases across the board, as noted by Neil Bellamy, consumer insights director at NIQ GfK.

Bellamy attributes this uptick, at least in part, to the BOE's recent rate cut. However, he cautions that cost-of-living concerns persist.

"Prices are still rising above the BOE's target; gas and electricity bills remain a challenge for many households," Bellamy noted.

Despite this improvement, consumer views on the overall economic outlook remain weaker than a year ago, according to the survey. This presents a challenge for Chancellor Rachel Reeves and the Labour government, who have prioritized economic growth since taking office last summer.

The UK economy expanded by a mere 0.1% in the final quarter of 2024, and the BOE significantly downgraded its growth forecasts for 2025 at its February meeting.