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UK consumer confidence diverges dramatically along generational lines
New data from the GfK Consumer Confidence Barometer reveals a striking split in economic outlook between younger and older Britons, with political allegiances emerging as a potential driver of sentiment.
Five decades of tracking sentiment
The GfK index, which subtracts pessimism from optimism to produce a net confidence score, has monitored national mood since the 1970s. Historically, all age groups moved in sync, reacting similarly to major events like Brexit, the pandemic, and the 2022 energy crisis triggered by Russia's invasion of Ukraine.
Yet by late 2024, this pattern fractured. Confidence among under-30s surged to levels unseen since before the 2016 Brexit referendum, while over-50s-particularly pensioners-plummeted to depths last seen during Liz Truss's brief premiership.
Politics as the new economic barometer
The divergence coincides with the July 2024 general election, suggesting a reversal in the traditional relationship between economic sentiment and voting behavior. Rather than financial circumstances shaping political views, analysts now suspect voting choices are coloring perceptions of the economy.
Younger voters, who largely backed Labour and the Liberal Democrats, report growing optimism, while older Conservative and Reform supporters express deepening pessimism. One theory points to social media algorithms amplifying partisan narratives-older users may encounter more negative content, reinforcing a bleak outlook.
"The flow of causality from economic sentiment to political sentiment has reversed. Now, how you voted influences how you feel about your finances."
Economic ripple effects
The Bank of England's interest rate cuts, which began in mid-2024, may have further widened the divide. Lower rates benefit younger borrowers and jobseekers but squeeze older savers, potentially deepening generational friction.
The split also offers clues about the UK's unusually high savings rate, hovering near 10%. Older Britons, sitting on cash reserves, appear reluctant to spend, dampening GDP growth despite wage growth outpacing inflation. Meanwhile, businesses catering to younger consumers report robust sales: pub chain Mitchells & Butlers saw festive season growth of 7.7%, while Fullers logged an 8% increase.
Policy and perception
The government is banking on infrastructure projects-like Heathrow expansions and a new northern rail line-to spur investment and counter pessimism. However, politically charged economic perceptions could undermine these efforts. As inflation nears the 2% target and regulated price hikes for rail and water are capped, officials hope sentiment will realign with improving fundamentals.
Yet the risk remains: if older voters' gloom persists, it could act as a drag on recovery, even as younger generations fuel a consumer rebound.
Lessons from abroad
The UK's divide mirrors trends in the US, where consumer confidence during the 2020 presidential transition swung sharply along partisan lines. Democrats' economic sentiment soared under Joe Biden, while Republicans' plunged-a phenomenon Biden aides dubbed the "Vibecession."
