Young Brits drive consumer confidence up while high-income households cut back
A confidence boost amongst Gen Z Brits drove an improvement in consumer confidence in June while wealthier households held back, according to new data.
Overall confidence about the state of the UK’s economy improved to -38 in June, up from -36 in May, according to the British Retail Consortium (BRC).
Brits’ confidence about their personal financial situation improved to -5, up 7 points month on month, while personal spending rose two points to +10.
“Younger generations [are] the most optimistic about the future,” Helen Dickinson, chief of the BRC, said.
“This rising optimism may also reflect the increase in minimum wage from April, with many younger people expected to have seen a significant uplift in their pay packet,” she added.
Last October’s Budget increased the minimum wage by 6.7 per cent, a larger rise than many firms had expected.
High-income households feel the pinch
The Consumer Sentiment Snapshot from Boston Consulting Group found that unlike Gen Z spenders, high-income UK households have started to cut back.
Director of BCG’s Centre for Growth, Roaul Ruparel, said that while high-income households are “typically more resilient”, the share of the wealthiest households who said they would increase spending fell across every category month on month.
“For the first time this year, they are showing a notable drop in confidence about both their personal finances and the broader economy, and this is reflected in their spending habits,” Ruparel said.
“The key question is at what point households will feel confident enough to start increasing their spend on more discretionary items, or if lower spending and higher saving rates are here to stay,” he added.
While the Bank of England is expected to slowly cut rates over the course of the year, a cut is unlikely to come in June after data on Wednesday put inflation at 3.4 per cent.
Tom Matterson, Investment Manager at Saltus, said that the wealth management fund’s confidence in the UK economy among high net worth individuals has “nearly halved”.
“Paired with increasing tax burdens and complex regulation, this is feeding into investment hesitancy and long-term concerns about UK competitiveness,” he said.