In my previous article (click here), I explained why the UK’s reputation as the ‘Sick Man of Europe’ was undeserved and outlined why we’re optimistic about the outlook for GDP growth. But what about the UK consumer? Are there similar grounds for confidence here?
The UK Consumer is in reasonably good health.
Rising interest rates and inflationary pressures dented consumer confidence through 2023. As mortgage rates soared during the year, concerns increased that the higher monthly repayments facing homeowners would inevitably lead to a decrease in discretionary spending. While certain sectors did endure a more difficult 2023, notably those exposed to ‘home improvements’, others fared far better.
Leisure stocks showed impressive resilience, as consumers continued to prioritise the experiences denied to them during the lockdowns of recent years. Broader economic data also pointed towards an outcome that was more positive than some of the negative headlines would suggest. Higher interest rates benefited those with savings and led to the household sector balance of interest payments turning positive for the first time in decades.