Business
The one measure that can tell us a lot about the state of the UK economy
Faisal IslamEconomics editor
ReutersA new year, a new beginning.
The latest monthly figures on the economy hardly confirm a change of gear, but nor do they back up the worst doom-mongers claiming decline and recession. It is neither doom nor boom, but a new year makes an opportunity to wipe the slate clean on policy, on a sense of certainty, and perhaps above all, the vibes in the economy.
There is one chart that might explain quite a lot about both the state of and the prospects for the UK economy. And it might say a fair bit about the political direction of the UK too.
It is consumer confidence. These are the long-running surveys that essentially put the nation on the economic psychiatric couch. How do you feel about the economy’s prospects? Are you likely to buy a major piece of equipment? How are your personal finances?
There is a solid data source of consistently asked questions going back five decades – it is the measure now called the GfK Consumer Confidence Barometer.
I’ve been reporting on this metric for half of its existence. It’s an imperfect science but the basic idea to reach the net confidence number is the optimism score minus the pessimism score.
The patterns then were interesting and consistent. And it was important as a predictor for those in power to stay in power. “It’s the Economy Stupid”, remember.
But has something significant changed in the water? This chart is quite extraordinary and a version of it has been circulated at the top of government.
A quick narration is in order.
This chart breaks down the headline net confidence number by age cohort.
Broadly speaking they used to move together, they were “correlated”.
Younger people have a generally sunnier starting point but that dims as they age – not a great surprise – and all age groups react to events similarly.
Over the past decade you can see correlated declines in consumer confidence across all age groups in reaction to the post-Brexit vote era and the impact of the pandemic.
The clear impact of the Russia-Ukraine war and the extraordinary rise in energy prices can be seen.
An interesting takeaway is how devastating the Liz Truss mini-budget in 2022 was for all age groups. A loss of confidence in the 45-day government and in economic prospects.
And up until 2024 all those lines move in tandem.
But what happens in late 2024? Divergence. Big time.
The under-50s’ consumer confidence goes higher, and soars for the under-30s to highs not seen since Brexit.
But take a look at the bottom two red lines. Over-50s’ and over-60s’ consumer confidence collapses toward Truss-era levels.
How can it be that the over 50s, and pensioners in particular, are living through another collapse in economic confidence, and yet the young adult population is much more positive?
Well the dotted line is the 2024 General Election. And while correlation does not mean causation, that is when this age-related break occurs.
Votes affecting vibes
A possible explanation from political economy is this – the flow of causality from economic sentiment to political sentiment has reversed.
Where how you felt about your finances influenced how you voted, now how you voted influences how you feel about your finances and the economic outlook for the country.
Young people broadly on the liberal left are now happier after enduring a rolling series of crises so far this decade, and with a government they largely voted for in 2024.
The older, who voted Conservative and Reform predominantly, are unhappy and unconvinced. They think the country has gone to the dogs even more than usual.
One possible factor is the tone set by social media and the emotive doom-scrolling and rage magnets embodied in their algorithms. Is this demographic seeing the Mad Max-style dystopia presented on their social media feeds and responding with this negative outlook?
There is also some evidence in the US of respondents to one consumer sentiment survey exhibiting a political tint on their sense of economic confidence. In the transition between the Donald Trump and Joe Biden administrations at the end of 2020, Democrats respondents’ economic confidence surged from 67 to 96, while Republicans’ crashed from 100 to 59.
The Biden administration then bemoaned what staffers called the “Vibecession” – the subsequent sense of economic malaise not really reflected in good economic numbers.
Rates a double-edged sword
There are other economic factors at play.
This rebound in confidence for the young coincides with when the Bank of England started cutting interest rates. Rate cuts are good for young home seekers and jobseekers, but bad for older savers.
There are significant economic consequences if this picture is correct too.
It might help explain the curiously high and nearly double-digit UK savings rate. That looks like a pandemic-style aberration. Older Britain is sat on its savings, despondent about the country and the economy, refusing to spend its money and weighing down GDP, even as pay rises for workers remain higher on average than the rate of inflation.
The takeaways from this chart are also well-reflected in the early financial results we are getting from businesses.
Many retail results have defied the gloom. Some bosses that complain the most about National Insurance rises seem to be reporting healthy sales and profits having basically paid for the tax.
Pub chain Mitchells & Butlers “traded very strongly across the festive season with like-for-like growth of 7.7%”. Fullers had an “outstanding five-week Christmas and New Year season across all parts of the estate”, 8% up on an already strong festive period last year.
Obviously challenges remain in the level of price rises. But inflation is on its way down to the 2% target, with a conscious attempt from government to limit regulated price rises for rail and water.
More rate cuts will come slowly, and the impact of previous cuts will also filter into the household sector.
A mortgage price war may be on its way to help a housing market rebound after months of Budget uncertainty.
The government will hope to draw a line under a tumultuous 2025, with what they hope is an investment boom typified by recent announcements on Heathrow and on a new northern train line.
So there’s a platform to defy the doom. But could people’s now politically charged perceptions of economic confidence be a brake on all that?
Business
Trump administration in advanced talks for a rescue package for Spirit Airlines, source says
A Spirit commercial airliner prepares to land at San Diego International Airport in San Diego, California, U.S., January 18, 2024.
Mike Blake | Reuters
The Trump administration is in advanced talks for a financing package for Spirit Airlines as the carrier is facing the risk of a liquidation, according to a person familiar with the matter.
Spirit had been facing a potentially imminent liquidation, people familiar with the matter told CNBC last week, speaking on the condition of anonymity to discuss matters that had not yet been made public. The Dania Beach, Florida-based carrier in August filed for its second Chapter 11 bankruptcy in less than a year, after it struggled to increase revenue to cover rising costs.
President Donald Trump hinted at potential government aid on Tuesday, telling CNBC’s “Squawk Box“, “Spirit’s in trouble, and I’d love somebody to buy Spirit. It’s 14,000 jobs, and maybe the federal government should help that one out.”
The White House didn’t immediately comment.
“We are hopeful that the government will recognize the needs for emergency funds especially in the current economic environment,” a spokesperson for the Associated of Flight Attendants-CWA, which represents Spirit’s cabin crews, said in a statement. “The last thing our economy needs is tens of thousands more people out of work and the last thing the travelling public needs is fewer choices in air travel.”
The terms of the financing deal weren’t immediately known. The Wall Street Journal earlier reported that the talks were in an advanced stage.
The U.S. airline industry accepted more than $50 billion in taxpayer aid to weather the Covid-19 pandemic, which is still its biggest-ever crisis, but those funds weren’t handed to one specific airline. Some of the aid gave the U.S. government stock warrants for airlines.
Airlines also received a government bailout following the Sept. 11, 2001, terrorist attacks, but that money was also for more than one company. The U.S. in 2008-2009 also bailed out the auto industry during the financial crisis and took stakes in manufacturers.
The Trump administration has taken equity stakes in some companies it deemed critical to national security like Intel and USA RareEarth, though Spirit stands out as it is in bankruptcy.
In February, Spirit said it expected to exit bankruptcy in late spring or early summer, telling a U.S. court that it would shrink and focus its planes on high-demand routes and travel periods. Pilot and flight attendant unions had also made concessions, including going on furlough in recent months, in a bid to help Spirit survive.
But jet fuel prices have nearly doubled in some parts of the U.S. since then, further adding to challenges for Spirit and the rest of the airline industry.
As a low-fare airline that also faces competition from larger carriers with their own no-frills, basic economy offerings, it has grown harder for Spirit to cover expenses. Spirit had introduced extra-legroom seats and other premium options to try to cater to higher-spending customers.
Business
United Airlines slashes 2026 forecast as fuel costs surge, but demand remains strong
A United Airlines plane approaches the runway at Denver International Airport on March 23, 2026.
Al Drago | Getty Images
United Airlines slashed its 2026 earnings outlook Tuesday as it grapples with a surge in jet fuel prices due to the Iran war, but CEO Scott Kirby said demand remains strong.
United said it could earn between $7 and $11 a share on an adjusted basis this year, down from its previous forecast of between $12 and $14 a share that it released in January, more than a month before the U.S. and Israel attacked Iran.
Wall Street had already been adjusting its expectations for the year because of higher fuel. Analysts polled by LSEG had forecast that United’s adjusted, full-year earnings would be $9.58 a share.
The carrier, like others, is trimming some of its planned flying this year to reduce costs. Lower capacity can drive up airfare, with fewer seats on the market.
For the second quarter, United forecast adjusted earnings of between $1 and $2 a share. Analysts had expected $2.08 a share for the quarter. United estimated its fuel price would average $4.30 a gallon in the second quarter.
The carrier said it expects its revenue to cover between 40% to 50% of the fuel price increase in the second quarter, as much as 80% in the third and between 85% and 100% by the end of the year.
United reiterated that it is tweaking its schedules to adjust to higher fuel, with capacity in the second half of the year expected to be flat to up about 2% on the year. It grew 3.4% in the first quarter.
Here is what United Airlines reported for the quarter that ended March 31 compared with what Wall Street was expecting, based on estimates compiled by LSEG:
- Earnings per share: $1.19 adjusted vs. $1.07 expected
- Revenue: $14.61 billion vs. $14.37 billion expected
Revenue, profit climb
Revenue overall rose more than 10%, to $14.61 billion, up from the $13.21 billion from a year before.
For the first quarter, United’s net income rose 80% to $699 million, or $2.14 cents a share, compared with net income of $387 million, or $1.16 cents a share, a year earlier. Adjusted for one-time items, United posted earnings per share of $1.19 a share.
Unit revenue was up in every reported segment, including for domestic U.S. flights, where it rose 7.9% to $7.9 billion from a year earlier, signaling strong pricing power in the quarter.
Jet fuel in the U.S. was going for $3.51 a gallon on Monday, down from the high on April 2 of $4.78, but far above the $2.39 on Feb. 27, the day before the first attacks on Iran, according to prices assessed by Platts.
Airline executives have said demand has remained robust even while they have increased fares and checked bag fees as they pass along higher fuel prices to customers.
“Bookings are strong,” Kirby told CNBC’s “Squawk Box” on Wednesday.
United and the rest of the industry have become more reliant on travelers who are willing to shell out more for flights and bigger seats, and who are less affected by price increases.
Alaska Airlines pulled its 2026 forecast on Monday because of higher fuel prices. It has raised fares about $25, CEO Ben Minicucci told analysts Tuesday.
Merger ambitions?
Kirby is likely to face questions on the company’s 10:30 a.m. ET earnings call on Wednesday about his ambitions for a merger with another airline.
Kirby floated a potential merger with American Airlines to a Trump administration official earlier this year, according to a person familiar with the matter, but President Donald Trump said he was against the idea.
“I don’t like having them merge,” he told CNBC’s “Squawk Box” on Tuesday morning. He said he would like someone to buy struggling discount carrier Spirit but he also suggested that the federal government could “help that one out.”
American also rejected the idea of a merger with United last week.
When asked about floating the merger, Kirby declined to confirm the meeting to CNBC’s “Squawk Box” on Wednesday but said: “We want to create a truly global airline.”
Kirby reiterated his view that the U.S. is at a deficit in international air travel as customers fly on international competitors, some of which are state owned.
Business
Energy prices ‘could stay high into winter’
NI Affairs Committee told even if conflict ends immediately it will take time for supply chains to return to normal.
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