UK confidence slips as unemployment rises and car output weakens, clouding the early-year growth outlook.
Summary:
-
UK consumer confidence fell to -19 in February, a three-month low
-
Unemployment rose to 5.2%, highest since early 2021
-
Car production dropped 8.2% y/y in January; exports down 10.1%
-
Commercial vehicle output plunged 68.6% amid restructuring
-
Savings rate remains elevated; 2026 car output seen rebounding to ~790k units
Britain’s consumer and industrial outlook showed fresh signs of strain in February, as confidence slipped to a three-month low while car production posted a sharp start-of-year decline.
The latest survey from GfK showed its Consumer Confidence Index fell to -19 in February, down from -16 in January and below economists’ expectations for a modest improvement. The drop was driven primarily by weaker perceptions of personal finances, with rising unemployment weighing on household sentiment.
Official figures last week showed the UK jobless rate climbed to 5.2% in the final quarter of 2025, its highest level since the three months to January 2021. GfK’s Neil Bellamy said concerns about job security are intensifying as unemployment reaches a near five-year high.
The deterioration in sentiment comes despite some tentative signs of resilience elsewhere. Business activity and retail sales data have shown improvement at the start of the year following a weak end to 2025. Meanwhile, Britain’s household savings rate remains elevated relative to pre-pandemic norms, a potential cushion for consumption should confidence stabilise.
On the industrial side, data from the Society of Motor Manufacturers and Traders (SMMT) showed UK car production fell 8.2% year-on-year to 65,249 units in January, as exports dropped 10.1% to 51,396 units amid softer demand in key overseas markets.
Overall vehicle output, including commercial vehicles, declined 13.6% to 67,415 units. Commercial vehicle production slumped 68.6%, marking a tenth consecutive monthly decline following major plant restructuring.
SMMT CEO Mike Hawes said the figures underscore the need for a forward-looking trade agenda that preserves preferential access to major markets, notably the European Union, amid rising protectionist rhetoric, including “Made in Europe” proposals. The EU, U.S. and China remain among the UK’s largest export destinations for autos.
Despite the weak start to 2026, industry forecasts still project total UK car production could recover to around 790,000 units in 2026, suggesting January’s decline may not yet represent a structural downturn.
Taken together, the data paints a mixed macro picture: softer household confidence and rising unemployment on one side, tentative activity stabilisation and hopes of an industrial rebound on the other. The near-term risk is that weakening labour conditions dampen consumer spending just as export-oriented sectors face external demand headwinds.
