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As the new year unfolds, the state of the UK economy remains uncertain—neither firmly in decline nor booming. The latest monthly data does not suggest a significant shift in momentum, and while it fails to support the dire predictions of recession, it also offers no clear sign of robust growth. Instead, this fresh start presents an opportunity to reset economic policies, instill greater certainty, and most importantly, influence the overall mood within the economy.
A crucial indicator that sheds light on the economic climate and possibly the political landscape is consumer confidence. This measure, derived from long-term surveys, attempts to gauge how the population feels about economic prospects, their personal finances, and their willingness to make major purchases. The GfK Consumer Confidence Barometer, a dataset with over fifty years of history, captures responses to consistent questions, offering insights into public sentiment over time. The net confidence score is calculated by subtracting pessimistic views from optimistic ones, providing a snapshot of the public’s economic outlook.
Historically, consumer confidence levels moved coherently across age groups, with younger people generally more optimistic than older generations. Over recent years, events such as Brexit and the Covid-19 pandemic led to a correlated decline in confidence for all ages. The 2022 mini-budget under Liz Truss dealt a particularly strong blow to consumer sentiment across the board, with confidence plummeting during her short tenure. Up until 2024, the trends in confidence remained largely synchronized among all age brackets. However, a marked divergence has appeared more recently. Younger people, especially those under 30, have seen a remarkable increase in confidence, reaching levels not witnessed since before Brexit, while those over 50 have experienced a significant collapse, with confidence sinking near the lows seen during the Truss era. This split coincides closely with the 2024 General Election, hinting at a strong relationship between political events and economic sentiment.
One explanation from political economy suggests the direction of influence is reversing: rather than economic feelings driving voting behavior, the choices made at the ballot box are now shaping economic outlook. Younger voters, who tended to support more liberal policies in 2024, appear more positive, perhaps buoyed by the government they elected. In contrast, older voters, many of whom supported Conservative or Reform parties, express dissatisfaction and concern about the country’s direction. Social media may exacerbate this divide, with doom-laden and anger-inducing content influencing perceptions, particularly among older demographics. Similar phenomena have been observed internationally; for example, US consumer confidence showed sharp political polarization around presidential transitions, with Democrats becoming more optimistic after 2020 and Republicans more pessimistic. The Biden administration referred to this mood disconnect as a “Vibecession,” reflecting a malaise at odds with economic data
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