Consumer sentiment survey

Spring 2019

Are consumers intending to spend more or less in 2019? Read our latest survey results.

Consumer spending strong despite Brexit

Our latest survey results are good news for the resilience of the British consumer overall, with Brexit having had less impact on sentiment than previously. However, not all parts of the consumer economy will benefit from this: consumers tell us they will prioritise spending on essentials (grocery, their homes) and going out (pubs, cinemas, leisure venues), but potentially at the expense of bigger ticket purchases. And spending patterns are likely to continue evolving in 2019.

We have been measuring consumer sentiment in the UK using a survey of a nationally representative sample of 2,000 adults since 2008. Unlike other surveys, we measure sentiment using consumers’ perceived own household disposable income, rather than their views on the wider economy. We believe this measure better reflects spending intentions; indeed, last year, as part of our 10th anniversary survey findings, we demonstrated the correlation between our survey results and the ONS’s official indicator of household expenditure.

Read on to see the highlights of our April 2019 survey and to explore the full 11 year data series

Slight improvement in sentiment

Our latest April 2019 survey shows a slight improvement in sentiment since December: marginally more people think they will be better off in the next 12 months than worse off, reflecting the wider economic landscape of low unemployment, real wage growth and low interest rates, which has an overall positive impact on the wallets of consumers.

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Stronger sentiment than during recession

Although not as optimistic as in late 2015 and early 2016, this is an improvement in sentiment compared with both our last survey at Christmas and this time last year, and significantly stronger sentiment than at any time during the last recession.

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Growing divergence between age groups

There’s growing divergence between different age groups, with young people more positive than they’ve ever been, while 45-64 year olds are now more negative about their outlooks than even over 65s

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Brexit uncertainty affecting fewer consumers

Brexit uncertainty is affecting fewer consumers than in our December survey; a minority, but more so among young people, Londoners and the Northern Irish, say they will reduce their spending or postpone big ticket purchases because of Brexit

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Spending to vary across different categories

Not all categories of spending will benefit from this positive sentiment, with consumers saying they’ll spend more on groceries, home improvement and going out, but less on big ticket items, and for the first time amongst under 45 year olds, clothing.

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Consumer sentiment tracker

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Balance of opinion

Which consumers are feeling most positive about their financial situation?

Our latest survey, undertaken over Easter 2019, found that just over a quarter of Britons thought they would be better off over the next 12 months, marginally higher than the proportion who thought they would be worse off. However, this proportion varied significantly by demographic group:

Thinking about your disposable income (e.g. money remaining after household bills, credit cards, etc.), in the next 12 months do you expect that your household will be better or worse off than last year?

April’s National Living Wage increase is evident in the divergence of opinion between the D and E socioeconomic groups. Unskilled manual workers (Ds) are twice as likely to think they’ll be better off next year than benefit-dependent Es, and the E socioeconomic group is the only one with a negative balance of opinion.

The fortunes of retirees and the middle aged also continue to diverge. While over 65s have historically been the least optimistic, they are now more optimistic than 55-64 year olds and, for the first time, 45-54 year olds. While, on the one hand, the triple lock to state pensions and pensions’ freedoms for private pensioners are giving security to some over 65s, on the other hand, those still working are increasingly concerned about job security, saving for retirement and paying for their children.

At the other end of the age spectrum, younger people, in fact all age groups under 45, continue to show a positive balance of opinion, with the sentiment of under 25s at their most positive since our survey began in 2008.

While the regional results in this survey broadly reflected the national picture, particularly across England, there was divergence among the other Home Nations: Wales was the most optimistic region in this most recent survey (with a balance of opinion of +10%), while Scotland and Northern Ireland lagged (-13% and -18% respectively).

If these levels of consumer sentiment translate into spending growth, a reversal of the consumer-led post-recessionary economic bounceback still seems some way off.

Is Brexit affecting consumer behaviour?

The improvement in consumer sentiment, albeit slight, in the first few months of 2019 might come as a surprise given the political turmoil over the same period. Since our last survey in December, the domestic news has been dominated by the possibility of the United Kingdom leaving the European Union, with successive deadlines passing, first on 29 March and then on 12 April.

However, while just under a third of consumers tell us that Brexit either has, or will, affect their spending, this proportion has actually declined from 40% in December, potentially reflecting the short term stability provided by the six month Brexit delay announced shortly before this survey:

Has Brexit affected the way you spend money in the last 12 months and will it affect it in the next 12 months?

The only demographic segment where the majority of consumers said their spending would be affected was the under 25s. Regionally, more than two in five adults in London and Northern Ireland say their spending will change, compared with just one in five in Yorkshire.

Despite Brexit seeming to affect fewer consumers, those who do expect to change their spending say that they will either buy fewer items (43%) or postpone making big purchases (34%). So while consumer sentiment may be resilient, some types of spending may not benefit from this confidence.

Which categories of consumer spending will prosper in 2019?

As in previous surveys, we also asked consumers whether they expected to spend more or spend less on a range of different product categories over the next 12 months. And, as in previous surveys, the only category where more of us expect to spend more, rather than less, was groceries. In every other, more people expected to spend less, than spend more.

However, two big trends emerged for the first time in our latest survey, which will be good news for some leisure operators and bad news for some retailers.

Firstly, “going out” consistently appeared in the top 3 list of categories for spending more. This was true for every age group; in fact, going out was the number one category for under 25s, eclipsing beauty, health and clothing which featured closer to the top of young people’s spending priority list in past surveys.

Interestingly, while going out was cited by many as a spending priority, it was also cited by some other respondents (e.g. 25-34 year olds and over 65s) as amongst their top three areas to reduce spending, so not all demographic groups should be expected to display homogenous behaviour. Moreover, going out was seen as distinct from “eating out”, which every age group between 18 and 55 cited as one of their top 3 areas for cutting back; so not all areas of leisure are likely to prosper and the turmoil faced by mid-market casual dining may not be over yet.

How do you expect your spending to change on the following categories in the next 12 month

At the other end of the spectrum, it’s no surprise that big ticket items were the top answer for spending cutbacks for over 45s; however, for the first time, clothing appeared top of the cutback list for many under 45s. Could this reflect the trend towards experiences over “stuff”, especially given that going out and holidays were the top priorities for under 25 year olds? Or is it a reflection of increased awareness of the sustainability agenda and ethical challenges of fast fashion?

We know from previous surveys that spending less on clothing typically translates into buying fewer items rather than trading down to different shops, so this suggests a more challenging outlook for both online and store-based fast fashion retailers in the coming months.

How do you expect your spending to change on the following categories in the next 12 month

Methodology and rationale

We asked a nationally representative sample of 2,000 adults the question “Thinking about your disposable income (money remaining after household bills, credit cards, etc.), in the next 12 months do you expect that your household will be better off or worse off?” We then calculated the balance of opinion by subtracting the percentage of people who thought they would be worse off from those who thought they would be better off.

We have continued to ask this same question every few months since April 2008, and the results have given us insight into the pulse of the nation, and proven to be a good predictor of future consumer spending patterns.

Contact us

Lisa Hooker

Leader of Industry for Consumer Markets, PwC United Kingdom

Tel: +44 (0) 7802 882 562

Kien Tan

Director, Retail Strategy, PwC United Kingdom

Tel: +44 (0)20 721 23910

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