Our final 2025 Consumer Sentiment Snapshot delves deeper into the trends that have been affecting consumer spending and household incomes this year. Despite wages rising and modest gains in official disposable income figures, consumers increasingly feel financially stretched. This is being felt most acutely among lower-income households, as stubborn inflation impacts cost of essentials. Meanwhile, higher income individuals, who have driven most spending growth this year, also appear to be becoming more cautious in their spending patterns and less bullish about their own personal finances.
As we look ahead to 2026, there are real questions around where economic growth will come from with consumption remaining subdued.
Key findings:
2025 has been a tough year for UK consumers.
Many consumers felt their disposable income shrinking. In January, people were 4 percentage points more likely to say their income had gone up than down. By December, that shifted, with the public being 7 percentage points more likely to say their income had dropped—a 11-point swing. Despite official data showing a slight rise in disposable income, people feel like they are getting poorer after taxes.
The starkest drop over the year in disposable income has been among lower income households.
In December, those with a combined household income under £21k were 17 percentage points more likely to report a decrease in disposable income, up from 7 percentage points in April. This shows a steady decline in their financial outlook since September and November.
While high earners continue to drive consumer spending, they have become less optimistic over recent months, spelling trouble if this starts to impact how they spend.
Between March and August, households earning above £62k grew more optimistic about their personal finances improving over the next six months. However, since then, confidence has dropped significantly. Our tracker shows a significant decrease in the wealthiest households (+£83k) expecting their finances to improve, falling from 66% (net) in August to 42% (net) in December. A similar decline in optimism is seen when people are asked about the economy and their business outlook.
Food spending has seen the biggest increase compared to the start of the year.
In February, 24% (net) of the public planned to spend more on food, but by December, that had increased to 36%. Meanwhile, spending on clothing and tech, which typically goes up before Christmas, stayed flat. In December, 9% more people said they'd cut back on tech spending than increase it, and 6% said they'd spend less, rather than more, on clothing.
Younger consumers have maintained their levels of optimism, while older generations consistently tightened belts and focused on essentials.
25-34 year olds were 31% more likely to say their personal finances would improve over worsen in the next six months., while older age groups (45-54 years old) are more likely to think their finances will worsen. Younger people are also planning to spend more on entertainment and clothing, while older groups are focused on essentials.
Additionally, most of the public think the Autumn Budget will have a negative impact on their finances.
They are 7% more likely to cut back (rather than increase) spending following the Budget and 5% more likely to save less.
Raoul Ruparel, Director of BCG’s Centre for Growth, said:
“There were strong expectations of a consumer recovery in 2025. Despite wages rising, this hasn’t materialised. In fact the growing cost of essentials, especially food, is contributing to an environment where consumer sentiment may weaken further.
“What’s more, our snapshot suggests that even those at the top end of the income spectrum, who have been driving most spending this year, are becoming more pessimistic about their own personal finances. If this continues, the likelihood of a consumer recovery in 2026 is low, with implications for the UK economy more broadly.”
Details on the survey:
These results are from a nationally representative poll of UK adults with a sample size of 1,500. December data was in the field from the 2nd to 8th of December. The poll results were weighted to the latest UK figures for gender, age, education, and region to ensure overall representativeness.
For further information on the findings, please contact Yashshri Soman.