Improving consumer confidence has given the Burnham administration an early opportunity to support housing and property investment, although the recovery in sentiment remains fragile.
Expectations for the economy over the next three months improved by eight points to -28 in August, according to the latest BRC-Opinium Consumer Sentiment Monitor.
The survey was conducted between 4 and 7 August, during the new Government’s political honeymoon but before official figures showed inflation rising from 2.6% to 2.9% in July.
Personal financial expectations also improved, moving from -12 to -9, while planned retail spending rose from +1 to +8. Overall spending expectations increased slightly from +13 to +15.
CONFIDENCE REMAINS NEGATIVE
The figures indicated that consumers had become less pessimistic rather than genuinely confident, with expectations for both the economy and personal finances remaining in negative territory.
However, improving sentiment could support property transactions if households become more willing to make major financial commitments.
Rightmove has separately reported a 5% increase in buyer demand since Andy Burnham became Prime Minister on 20 July, although activity remains around 10% below last year’s level.
For developers, investors and specialist lenders sustained improvement could help support property sales, refinancing exits and confidence in committing capital to new schemes.
Much now rests on the Government’s first Budget in October. Measures affecting stamp duty, business taxation, housing investment and household finances could determine whether the initial improvement develops into a broader recovery.
BUDGET FACES ACID TEST
Helen Dickinson, Chief Executive of the British Retail Consortium, says: “Consumer sentiment continued to rise with confidence in the economy hitting its highest level since the historical lows reached at the start of the Iran conflict.
“Expectations for personal finances saw a small improvement, driven by an optimistic Gen Z. This same generation also reported a bump in spending plans, as the stifling summer heatwaves are expected to give way to more shopping-friendly temperatures in much of the country.
“The Burnham administration is enjoying a honeymoon boost driven by less pessimism about the outlook, but maintaining that momentum will depend on whether the Government can ease the pressure on household budgets.”
Dickinson warns that regulatory costs, energy bills and business rates risked feeding through into higher consumer prices.
She adds: “The Budget will be the acid test of this government’s real commitment to growth: if the government can reduce retail business costs, from energy bills to business rates, it will be ordinary households who feel the benefit.
“A Budget that backs retail and reduces costs is a pro-consumer Budget.”
