Here’s a startling revelation: the economic pulse of the UK might hinge on a single, often overlooked metric—one that reveals far more than just numbers. But here’s where it gets controversial: what if the way people feel about the economy is now driven more by their political beliefs than the other way around? Let’s dive in.
A new year often symbolizes a fresh start, but does it truly bring change? Recent economic data doesn’t scream transformation, nor does it validate the doomsday predictions of decline. It’s neither a boom nor a bust, yet the start of a year offers a chance to reset—not just policies, but also the collective mindset and the overall vibe of the economy. And this is where consumer confidence steps into the spotlight.
There’s one chart that tells a compelling story about the UK’s economic state and its future prospects. And this is the part most people miss: it might also shed light on the political trajectory of the nation. We’re talking about consumer confidence—those long-standing surveys that essentially put the nation on an economic therapist’s couch. Questions like, How do you feel about the economy’s future? Are you likely to make a big purchase? How’s your financial health? have been asked consistently for five decades, forming the backbone of the GfK Consumer Confidence Barometer.
I’ve been tracking this metric for half its existence. It’s not an exact science—the net confidence score is simply optimism minus pessimism—but its patterns are revealing. Historically, these patterns were not just interesting; they were crucial predictors for those in power. Remember the mantra, ‘It’s the economy, stupid’? But has something fundamentally shifted?
The chart in question is extraordinary, and a version of it has made its way to the highest levels of government. Let me walk you through it.
This chart breaks down the overall consumer confidence score by age group. Traditionally, these groups moved in sync—they were correlated. Younger people typically started with higher confidence, which naturally dipped as they aged, but all groups reacted similarly to major events. Over the past decade, you can see correlated declines across all age groups in response to Brexit and the pandemic. Notably, the 2022 Liz Truss mini-budget was a confidence killer for everyone, reflecting a loss of faith in both the short-lived government and the economy.
Up until 2024, these lines moved in tandem. But then something dramatic happened: divergence. The under-50s’ confidence surged, with the under-30s reaching highs not seen since Brexit. Meanwhile, the over-50s and over-60s saw their confidence plummet to Truss-era lows. How can older generations feel so pessimistic while younger adults are increasingly optimistic?
Here’s where it gets intriguing: the dotted line on the chart marks the 2024 General Election. While correlation doesn’t prove causation, this age-related split coincides with the election. A possible explanation from political economy suggests a reversal in the flow of causality. Historically, your financial outlook influenced your vote. Now, it seems, your vote influences your financial outlook and broader economic sentiment.
Younger voters, largely leaning liberal-left, are now more optimistic after weathering a series of crises this decade, and with a government they largely supported in 2024. Older voters, who predominantly backed the Conservatives and Reform, are disillusioned. They see the country in a worse state than ever. Could social media play a role? The doom-scrolling and rage-inducing algorithms might be amplifying a Mad Max-style dystopia for this demographic, fueling their negativity.
This isn’t unique to the UK. In the US, a consumer sentiment survey during the Trump-to-Biden transition in 2020 showed Democrats’ economic confidence soaring from 67 to 96, while Republicans’ plummeted from 100 to 59. The Biden administration later dubbed this the ‘Vibecession’—a sense of economic gloom despite positive data.
Other economic factors are at play too. The rebound in young people’s confidence aligns with the Bank of England’s interest rate cuts, which benefit young homebuyers and jobseekers but hurt older savers. If this trend holds, it could explain the unusually high UK savings rate, as older generations sit on their savings, dragging down GDP despite wage growth outpacing inflation.
Early business results reflect this divide. Retailers like Mitchells & Butlers and Fullers reported strong festive sales, defying the gloom. Yet, inflation remains a challenge, though it’s trending toward the 2% target, thanks to government efforts to cap regulated price rises. More rate cuts are expected, and the housing market might see a rebound with a potential mortgage price war.
The government hopes to end a turbulent 2025 on a high note, with investments like the Heathrow expansion and a new northern train line. But here’s the question: will politically charged perceptions of economic confidence derail these efforts?
What do you think? Is economic sentiment now driven by politics, or is this just a temporary blip? Share your thoughts in the comments—let’s spark a conversation!
