‘Burnham bounce’ lifts UK consumer confidence to 2023 level

New figures from GfK show overall consumer confidence rose by six points in July to minus 17 – the largest monthly increase since November 2023.

Although confidence remains below zero, the sharp improvement suggests households are becoming more optimistic after years of high inflation and cost-of-living pressures.

The research was carried out between July 1 and July 14, before Andy Burnham officially entered Downing Street, meaning respondents were reacting largely to expectations surrounding the new Prime Minister rather than his policy announcements.

Confidence in the UK’s economy over the past year climbed 10 points to minus 39, while expectations for the year ahead improved by eight points to minus 28.

People also appeared more willing to spend, with GfK’s Major Purchase Index – which measures confidence in buying expensive items such as furniture, electrical goods and cars – jumping eight points to minus 12, its greatest improvement in months.

Confidence in personal finances over the next year also edged into positive territory, rising three points to plus one.

Neil Bellamy, Consumer Insights Director at GfK, said: “Hot on the heels of the summer heatwaves, July has delivered a wave of optimism.”

He suggested several factors had combined to improve sentiment.

“The sense of a fresh start following the appointment of a new Prime Minister surely accounts for some of this bounce.”

Bellamy also pointed to hopes that tensions in the Middle East would ease.

“There were also hopes at the start of July that the Middle East conflict might stabilise and bring UK fuel prices down.”

He added that England’s performances at the FIFA World Cup had also helped boost morale.

“The feel-good factor of the Fifa World Cup will have reinforced sentiment too.”

Despite the sharp improvement, Bellamy cautioned that households are not yet out of the woods.

“July’s improved Overall Index Score remains within the narrow range seen since the end of 2023, and it is a decade since the headline score was in positive territory.”

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He said the Government would now need to turn optimism into lasting economic improvement.

“For the ‘Burnham bounce’ to be sustainable and boost consumer confidence, it will require consistent delivery by the refreshed UK Government against deep cost-of-living challenges and persistent low economic growth.”

The figures provide an encouraging early sign for Prime Minister Andy Burnham and Chancellor John Healey, who have already announced a series of cost-of-living measures, including a cut to VAT on electricity bills, the return of the £2 bus fare cap and plans to review the frozen £12,570 income tax personal allowance in the Autumn Budget.

While confidence remains in negative territory, the biggest monthly rise since 2023 suggests households are beginning to believe the economic outlook could finally be improving.

Good weather, sporting success or cost of living help – what’s making you feel positive this summer? Tell us in the comments below…