UK consumer confidence edges up in January as spending outlook softens

UK consumer confidence showed tentative signs of improvement at the start of the year, though expectations for spending weakened sharply after the festive period, according to a new survey from the British Retail Consortium.

The BRC's January consumer sentiment monitor, compiled with polling firm Opinium, found that expectations for the state of the UK economy over the next three months improved to a net score of negative 32 in January from negative 38 in December.

Expectations for consumers' personal financial situation also edged higher, rising to negative 8 from negative 10.

However, confidence around spending cooled markedly as households moved past Christmas.

Expectations for personal retail spending over the next three months fell to negative 6 in January from positive 6 in December, while expectations for overall personal spending dropped to positive 5 from positive 17.

At the same time, consumers became more inclined to save. Net expectations for personal saving rose to positive 2 in January, reversing a negative 9 reading in December.

Helen Dickinson, chief executive of the British Retail Consortium, said the new year had brought "hints of optimism", marking a second consecutive improvement in sentiment towards both the economy and household finances.

"This was the highest in five months, though similar to a year earlier," Dickinson said. "The contrasting sharp fall in spending expectations, both retail and overall, was expected as the festive season came to a close."

She added that the slowdown in spending expectations was felt most strongly among Millennials and Generation X, groups more likely to have children living at home and to have faced higher seasonal outgoings.

While welcoming the improvement in confidence, Dickinson warned that the recovery remains fragile. She said wages are still struggling to keep pace with higher living costs, leaving many consumers feeling that neither their personal finances nor the wider economy are making meaningful progress.

"With wages still struggling to keep pace with higher costs of living, many people feel as though neither their own finances nor the wider economy is moving forward," she said.

Dickinson also cautioned that rising costs for retailers could undermine sentiment later in the year. She said that if business costs continue to increase through 2026, from higher business rates to additional regulatory burdens, inflation could remain elevated and consumer confidence could weaken again.

The BRC-Opinium survey was conducted between January 6 and January 9 and was based on responses from 2,000 UK adults.