UK consumer optimism rises following interest rate cut

In August 2025, the UK saw a significant shift in consumer sentiment, as data from the latest S&P Global UK Consumer Sentiment Index revealed an increase. This index, which surveys over 1,500 households, recorded a reading of 47.0 for August, up from 45.1 in July, marking the highest level since October of the previous year. Consumers, despite still experiencing negative sentiment overall, are beginning to feel slightly more optimistic about their personal finances. This uplift coincided with the recent monetary policy changes made by the Bank of England. Just prior to the data collection for the sentiment index, the Bank of England had announced a reduction in the base interest rate, moving it from 4.25% to 4%. This cut, initiated to stimulate economic activity and easing fiscal pressure on consumers, served as a catalyst for improving household confidence. The sentiment index is noteworthy as it remains below the neutral mark of 50, indicating that while there is some recovery in outlook, overall consumer sentiment remains in negative territory. Additionally, households expressed a more favorable view of the labor market, showing increased job security and activity at work, contributing to the overall improvement in consumer confidence. Economists, including Maryam Baluch from S&P Global Market Intelligence, pointed out that the data reflects a revival in household sentiment immediately following the interest rate cut, suggesting a positive reception to this monetary policy adjustment. The conditions thus indicate a delicate balance for consumers in the UK, where improvements in financial outlook are tempered by existing economic challenges.