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Contrasting Consumer Confidence: UK Surges as Germany Stumbles Amid Political Strife

Consumer confidence in Germany unexpectedly dipped for the February reading, registering at -29.7 against the anticipated -24.5. In contrast, UK consumer confidence reached a two-year peak this January, recording a higher-than-expected -19 compared to the forecasted -21. While German sentiment is weighed down by political turbulence and various strikes, UK sentiment is on the upswing, buoyed by optimism about easing inflation and improving financial conditions.


Although both readings remain below their long-term averages, there has been a notable upswing from the lows witnessed at the close of 2022. This improvement is attributed not only to the decline in inflation but also to the relatively stable job market. The particularly bleak figure in Germany is largely seen as a consequence of domestic political challenges, which may necessitate new elections to resolve.


Our Take: Sentiment in Germany is undeniably poor, acting as a drag on a more robust recovery. Conversely, sentiment in the UK is distinctly on the rise, despite challenging circumstances for the current political leadership and looming elections this year. Consistent with our leading indicators, the UK is poised to outperform expectations this year, and the Bank of England might be the last among its peers to reduce rates.


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