The latest edition of the EY UK Future Consumer Index (FCI) has recently revealed that consumer financial sentiment is finally beginning to stabilise and improve with 13% of UK consumers feeling better compared with four months ago. As of September 2023, consumers reconsider investing in treats and experiences, rather than just worrying about how to pay the day-to-day bills.
Concerns about affordability and cautiousness around finances remain, but it seems they have peaked, and are starting to reduce. At 47%, the number of those extremely concerned about the UK economy is at its lowest point in 18 months, whilst those extremely concerned by the UK cost of living crisis is down by 10 percentage points in the last year.
Furthermore, EY shares that positivity has increased since inflation peaked at 10% in October 2022. Since then, the number of consumers expecting their financial situation to remain constant or improve has risen from 57% to 72%. Looking at comparable economies, such as the US, which are further along in their recovery, suggests that the UK could see an upturn in GDP growth once inflation and consumer sentiment return to previous levels, which would propel this positive momentum further. This is in line with the EY ITEM Club’s GDP expectations with consumer spending growth also anticipated to rise to 0.9% in 2024, up from 0.7% projected in the Autumn Forecast.
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