UK Public's Economic Pessimism Hits Lowest Level Since 1978
A survey on economic expectations among the UK public shows that the proportion of respondents believing the economy will worsen in the next year has risen to the highest level since the survey began, with overall pessimism reaching a record low since 1978. In the latest data, about three-quarters of respondents expect the economy to deteriorate over the next 12 months, while only a single-digit percentage believes it will improve. The net economic optimism index has fallen to -68, lower than during the recessions of the 1980s, the 2008 financial crisis, and the post-pandemic cost of living crisis.
Consumer confidence tracking from several English institutions shows a similar trend: Deloitte's latest quarterly report indicates that the overall consumer confidence index in the UK has dropped to a near three-year low, with confidence in the macro economy falling to around -69, close to the pessimistic range seen at the peak of the cost of living crisis. Research institutions point out that high and "stubborn" inflation, real income squeeze, and concerns about employment prospects have led UK residents to judge the macro outlook as significantly weaker than their feelings about their own short-term financial situations.
Source: Public Information
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This set of data signals that "sentiment is worse than reality," and it is at a historically extreme position. The UK has experienced multiple severe economic shocks over the past few decades—1980s recession, 2008 financial crisis, pandemic, and soaring energy prices—but the current net pessimism value is lower than during these periods, indicating that public expectations have shifted from "cyclical downturn" to a psychological pricing of "long-term stagnation or even relative decline." Once this long-term pessimism solidifies, it can suppress growth through reduced consumption, cautious investment, and risk aversion, leading to a "self-fulfilling" low-growth equilibrium.
On a deeper level, this reflects a structural issue faced by middle-income economies in the "post-high inflation era": insufficient growth momentum, while nominal interest rates and debt levels remain high, and fiscal space is limited, making it difficult for the government to restart an optimistic narrative through large-scale spending. After Brexit, the UK has also faced trade and institutional uncertainties, diminishing its relative standing in global capital and talent competition, leading to a significant weakening of residents' perception of the "long-term opportunity set" for the country. This has transformed economic expectations from "short-term difficulties" to "structural pessimism."
From a class and distribution perspective, the survey shows that pessimism is highly consistent across age and income levels, with only slight differences in degree, indicating that sentiment is not confined to a specific group but is a broad consensus across generations and classes. High-income groups are similarly pessimistic about the macro situation, but they have stronger self-defense capabilities; middle- and low-income groups feel that their lifestyles and upward mobility have been long-term compressed under high inflation and housing costs. This "societal shared pessimism" often means that the old distribution pattern is difficult to maintain, while new growth narratives and institutional arrangements have yet to emerge.
In a longer historical cycle, the UK's situation can be seen as a "repricing of an established core economy": the marginal benefits of globalization are diminishing, and the growth model dominated by finance and real estate lacks momentum, while a new round of technological and industrial agglomeration (especially in AI and high-end manufacturing) is increasingly concentrated in the US and certain EU and Asian economies. When a country's "high value-added position" in global division of labor is questioned, residents' subjective expectations for the future often deteriorate ahead of objective indicators, which is precisely the deep structural change reflected in the current sentiment data from the UK.