The "Burnham bounce", combined with sunshine and a strong World Cup run, raised hopes for Britain's consumer economy. Data firm GfK credited Andy Burnham's return to Westminster politics for lifting UK consumer confidence at its fastest monthly pace for almost three years in June.
The improvement was driven largely by how consumers viewed the British economy's prospects, with a 10-point advance in feelings about the past year and an eight-point gain for the next 12 months. "The sense of a fresh start following the appointment of a new prime minister surely accounts for some of this bounce," GfK said.
Policies and broader trends
Burnham's moves include a temporary VAT cut on electricity bills from October, a £2 bus fare cap across England, and a 20% business rates reduction for pubs, clubs and live music venues. The headline inflation rate fell more than expected to 2.6%.
However, deeper trends emerge from the GfK data. Older Britons aged 65 and over are among the gloomiest, while 16- to 29-year-olds are more optimistic despite challenges like an AI-disrupted jobs market and high rents and house prices. Youth unemployment is at the highest level in a decade, but over-65s are more likely than under-30s to predict rising joblessness and worry more about the economic outlook, their own finances and the property market.
Inequality and spending patterns
The UK's deep inequalities expose splits in consumer perception. The poorest households unsurprisingly have the gloomiest outlook. Official figures show weekly spending by the richest fifth of households increased at twice the rate of the poorest fifth in the year to March 2025, rising by £98.10 (10%) to £1,083.60 compared with £18.10 (5%) to £407.30.
Since late 2021, average consumer prices have risen by more than a quarter, with food and energy rising significantly more. The Bank of England raised interest rates to combat inflation, pressuring borrowers, while many mortgage-free older Britons remained insulated.
Consumer spending and savings
Consumer-facing services output remains about 6% below pre-pandemic levels, with travel agents, food and drink, and hoteliers hardest hit. Threadneedle Street predicts real incomes will have fallen by about 0.5% in the year to end of June. The volatile Middle East conflict is expected to stoke inflation further, likely prolonging belt-tightening.
The household saving ratio, at 8.9%, is among the highest in a decade. During pandemic lockdowns it reached 27.5%, banking billions and later fueling a consumption boom and inflation. But not everyone saved: the highest 40% of earners and retirees saved most, while the poorest fifth suffered a decline in savings. Regionally, savings concentrated in affluent southern English neighbourhoods, where Centre for Cities found households banked £12 for every £1 saved in poorer northern areas.
For the "Burnham bounce" to be sustainable, it will require a continued turnaround in consumer confidence, with a laser-like focus on the households struggling the most.
