(Bloomberg) -- Labour’s landslide election victory had a muted impact on the mood of UK households, though consumer confidence still edged up to a near three-year high.
GfK said its confidence index rose one point to minus 13 in July, the fourth consecutive month of improvement.
It was the highest level since September 2021, with July’s survey covering both the period of the election and the UEFA European Football Championship.
The figures suggest that Labour’s huge win in the July 4 election has not been greeted with a wave of optimism by households after warnings from the new government of limited space for spending increases and tax cuts.
Joe Staton, client strategy director at GfK, said that the election and England’s strong run in the Euros “could have boosted the national mood but appear to have had limited positive impact.”
“July’s consumer confidence poll suggests a note of caution as people wait to see exactly how the UK’s new government will affect the wider economy and their personal finances,” he said.
While the survey found that major purchase intentions increased this month, there was little change in how consumers viewed the economic outlook and their own personal finances.
Chancellor of the Exchequer Rachel Reeves warned in an interview with Bloomberg TV on Thursday that “difficult decisions” lie ahead as she tries to fix the country’s public finances.
“I’m under no illusions about the scale of the challenge that I face,” Reeves said. “I’m not going to announce any tax breaks or tax changes without saying where the money’s going to come from.”
Linda Ellett, UK head of consumer, retail and leisure for KPMG, said confidence levels continue to be governed by a “higher cost environment and whether households have been able to absorb the likes of mortgage and rent increases, or have had to significantly adapt other areas of their spend.”
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