22nd Aug 2025 01:29
(Alliance News) - UK consumer confidence improved in August after the latest interest rate cut, but uncertainty over the possibility of future tax hikes and inflationary pressures weighed on expectations going forward, survey results showed Friday.
The GfK consumer confidence index rose to minus 17 in August from minus 19 in July, above the FXStreet-cited consensus forecast of minus 20.
Consumer expectations for their personal financial situation over the next 12 months rose to plus 5 in August from plus 2 in July, while expectations for the general economic situation over the next 12 months declined to minus 30 from minus 29.
Neil Bellamy, consumer insights director at GfK, said: "The biggest changes in August are in confidence in personal finances, with the scores looking back and ahead a year each up by three points. This is likely due to the Bank of England’s August 7th cut in interest rates, delivering the lowest cost of borrowing for more than two years. The improved sentiment on personal finances is welcome, but there are many clouds on the horizon in the form of inflation – the highest since January 2024 – and rising unemployment."
The BoE lowered its bank rate to 4.00% from 4.25% after a close 5-4 vote by the Monetary Policy Committee.
"There’s no shortage of speculation, too, about what the autumn Budget will bring in terms of tax rises. While August’s Overall Index Score of -17 is the best this year, consumer confidence continues to move in a very narrow band, and there’s no sense that it is about to break out into fresher, more optimistic territory. The UK’s consumers are still in wait-and-see mode, and any surprises could result in sudden and sharp changes in sentiment," Bellamy added.
The index readings are sourced from the GfK Consumer Confidence Barometer, published jointly by GfK and the Nuremberg Institute for Market Decisions. The CCB is based on survey responses from a sample of 2,002 individuals in the UK aged 16 and above.
By Elijah Dale, Alliance News senior reporter Asia-Pacific
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