An update on European consumer sentiment

Despite geopolitical and economic uncertainty, European consumer sentiment is holding steady heading into the holiday season—with spending intentions remaining in line with last year’s levels. Inflation remains the top concern for consumers, but its gradual stabilization in the eurozone has allowed many shoppers to maintain their holiday budgets.

For consumer businesses, the holiday season offers a mix of challenges and opportunities. The growing popularity of gift cards is an important trend for retailers—as well as restaurants and service providers, which have not historically had a strong option for gifting participation. The continued importance of omnichannel shopping underscores the need for companies to excel at each stage of the purchase journey, including online and in-store touchpoints.

Regional nuances further define the season’s dynamics. In the United Kingdom, consumers are prioritizing at-home indulgence, driving demand for food, alcohol, and comfort-driven purchases. Meanwhile, shoppers in continental Europe say they are using the holidays to stock up on postponed purchases.

These insights, drawn from McKinsey’s latest ConsumerWise research across key European markets—France, Germany, Italy, Spain, and the United Kingdom (EU-5)—offer a roadmap for businesses to navigate shifting consumer behaviors and maximize engagement during the year’s most critical shopping period.

Across EU-5 nations, net consumer sentiment—the difference between optimism and pessimism—remains relatively unchanged compared to previous surveys. Stable inflation rates and a resilient job market are likely strong drivers for this trend. However, France stands out as the exception, experiencing a significant uptick in pessimism with minimal corresponding movement in optimism.

In contrast, sentiment in the United States has been more volatile, though it remains higher than European levels.

European consumer sentiment is holding steady but remains lower than in the United States.

Inflation remains the top concern for European consumers, but its impact has softened on average compared to last year. The United Kingdom is the only market in the EU-5 that saw an increase in concerns about rising prices, although this difference (two percentage points) is marginal. Stabilizing inflation rates across much of the eurozone—particularly in France and Germany—have provided consumers with some relief. However, the United Kingdom faces renewed challenges, with a recent spike in inflation¹ that could dampen spending confidence.

Inflation concerns continue to ease but remain top of mind for EU consumers.

Across the EU-5, 70 percent of respondents plan to maintain or spend more than their 2024 holiday spending levels, a figure five percentage points higher than in the United States. In terms of those expecting to spend more, the United Kingdom leads the European nations at 23 percent.

Omnichannel shopping continues to be a defining feature of shopping behavior. Most consumers across the EU-5 are opting for a hybrid approach, combining the convenience of online with the experiential aspect of in-store purchasing.

Budgets remain largely unchanged compared to last year, with a significant share intending to spend more.

Plans for when to start holiday shopping varied significantly by country. Just over half (54 percent) of respondents across Europe said that they intend to begin their holiday shopping before the end of November (a figure that jumps to 67 percent when factoring in Black Friday weekend). Eleven percent of consumers said they have already started their holiday shopping, and UK consumers are particularly early planners (21 percent of those consumers reported already shopping for the holidays). Consumers in Italy were most likely to say they will begin their holiday shopping on Black Friday weekend (21 percent versus 13 percent on average).

That said, a notable portion of survey participants reported no intention of participating in holiday shopping at all. Across Europe, 14 percent of consumers indicated that they would opt out of holiday shopping this year, a figure that rises to 18 percent of consumers in Germany and 17 percent in Italy.

France and United Kingdom start their holiday shopping early, while Italy holds out for Black Friday.

Consumers report that groceries will account for the largest portion of their holiday budgets. Nearly half (46 percent) of UK shoppers identified groceries as their primary expense category. Apparel, gift cards, and toys rank next, although preferences vary by country. The growing popularity of gift cards as a priority purchase suggests an emphasis on practical gift giving—a trend that could emerge as a key factor for retailers this holiday season.

Splurge behavior has seen a slight decline compared to the previous quarter, with the United Kingdom the only market remaining steady at 34 percent. Germany leads the continent—and even outpaces the United States—with 43 percent of respondents planning to treat themselves. France and Italy recorded the sharpest declines, dropping three percentage points each, while Spain saw a more modest decline of one percentage point.

However, the overall decline is within the margin of error, suggesting stability in consumer spending patterns.

Consumer intent to splurge experiences a slight dip as priorities across countries vary significantly.

As with previous ConsumerWise surveys, a greater percentage of Gen Z respondents said they intend to splurge compared to other age groups. Younger generations continue to channel their splurge behavior toward goods rather than services, with discretionary spending concentrated on items such as apparel, electronics, and home essentials. In contrast, baby boomers are more inclined to splurge selectively on experiences, particularly dining out.

This generational divide underscores distinct spending priorities: younger consumers gravitate toward tangible, material purchases, while older generations prioritize experiential indulgences that offer memorable, social, or leisurely moments.

Generational differences emerge across splurging categories.

With inflation concerns gradually easing, spending intentions are holding firm across key categories. Holiday shopping behaviors and splurge patterns reveal notable differences across generations and countries, highlighting a mix of caution and optimism. As the holiday season approaches, European consumers continue to balance practicality with moments of indulgence, reflecting their adaptability in an evolving economic environment.

Looking ahead, companies can focus on offering value-driven options, enhancing omnichannel experiences, and tailoring strategies to meet the distinct spending priorities of different demographics and regions.

ABOUT THE AUTHOR(S)

Jessica Moulton and Pavlos Exarchos are senior partners in McKinsey’s London office, where Gizem Ozcelik is a capability and insights specialist, and Nadya Snezhkova is a senior expert; Fleur Porter is an associate partner in the Paris office.

An update on European consumer sentiment: Outlook holds, despite dismay abroad

While US consumers closely tracked tariff news and were less optimistic about their economy, European optimism ticked up marginally, as did intent to spend.

In the second quarter of 2025, following tariff announcements, European consumer sentiment remained relatively stable. As the rate of inflation continues to slow, European consumers’ concerns on this front have abated slightly. Consumers reported a slight increase in their likelihood to spend in both discretionary and nondiscretionary categories.

This picture is in contrast to what consumers in the United States told us, namely that their pessimism grew in the weeks following the tariff announcements. It also stands in contrast to the European consumer sentiment dips observed during past major disruptions—including the COVID-19 pandemic, the start of the war in Ukraine, and recent inflation spikes.

The following charts highlight findings from our latest ConsumerWise research, conducted at the end of April. The research examines consumers’ overall outlook, trade-down practices, spending intent by category, and willingness to splurge. Our research covers France, Germany, Italy, Spain, and the United Kingdom.

In Europe, consumers reported feeling slightly more optimistic on average in the second quarter of 2025 compared with the beginning of the year. There were some country-by-country variations, to be sure: Consumers in France, Germany, and Spain reported an increase in optimism in the second quarter, while optimism rates remained somewhat stable in Italy and declined in the United Kingdom. This contrasts with a marked increase in pessimism among US consumers.

Consumers in Europe felt slightly more optimistic on average—marking a divergence from their US counterparts.

While 29 percent of American consumers and 34 percent of Canadian consumers reported tariffs among their top three concerns, only 11 percent of Europeans did so. This may be because US consumers said they engaged in tariffs-related news and discussions more than European consumers: 37 percent of US consumers reported they were actively following news about tariffs, while only 27 percent of Europeans said the same. Within Europe, interest in tariffs varied widely: Consumers in Italy reported the highest engagement with tariffs news (34 percent), while consumers in the United Kingdom were least engaged (18 percent).

Inflation is still EU consumers’ top concern, but this has decreased compared with last year.

Although many European consumers said they have already changed or plan to change their spending habits in response to tariffs, they reported doing so at a lower rate than consumers in the United States. In fact, consumers in the United States were 14 percentage points more likely to report already changing their spending habits than the global average (32 percent versus 18 percent). Consumers in Germany were the least likely to say that they had already changed their spending habits—and also most likely to say that they don’t expect to change their spending habits moving forward.

In response to tariffs, US consumers report plans to change spending habits more than European consumers do.

With inflation stabilizing and the economy showing resilience, European consumers maintained their household spending and savings rates in line with levels observed over the past year. Incomes have also remained stable. This stability could lead to greater consumer confidence in the economy.

Consumers’ household finances remain stable.

Consumers reported their intent to spend less on vehicles over the next three months, while their intent to spend across most other essential and semidiscretionary categories remained fairly stable, with more increases in spending than decreases (after accounting for seasonal effects).

Consumers’ intent to spend on essentials and semidiscretionary items ticks up in some categories but is down materially in vehicles.

In Spain, consumers reported an intent to increase spending on most discretionary categories relative to the first quarter of the year. This could be due to higher GDP growth than in other European countries and a dip in the unemployment rate (although Spain’s rate is still relatively high for the region). Consumers across Europe, meanwhile, reported an intent to spend more on travel-related categories, such as cruises, hotel and resort stays, and international flights, indicating that the typical seasonal spending on holiday excursions may indeed happen this summer.

Consumers’ spending intentions across discretionary categories are stable.

Trading down continued to be widely reported among European consumers—a trend we have also observed in other markets around the globe. Even if economic signals improve in Europe, we expect trading down, especially by adjusting quantity or pack size, to remain sticky.

More Gen Zers reported trading down than any other age group in Europe on average. In the United Kingdom, 92 percent of Gen Zers (versus only 73 percent of all UK respondents) reported trading down in the second quarter, up six percentage points from the previous quarter.

Trading down persists mostly in line with the previous quarter.

On average, more Gen Zers report trading down than any other age group.

Only 37 percent of European consumers said they intend to splurge over the next three months, with some variation by country: 45 percent of consumers in Germany said they intend to splurge, while only 34 percent of consumers in the United Kingdom reported the same. These figures have remained fairly stable over the last few quarters. Among consumers who reported their intent to splurge, they were most interested in splurging on travel and dining out, with some notable exceptions. In the United Kingdom, the number one splurge category was groceries. And younger consumers were more likely to name apparel as their top splurge category (38 percent) than travel (23 percent) or dining out (31 percent).

Baby boomers across Europe reported an intent to splurge less often, on average, than younger generations did, highlighting a generational divide in discretionary spending habits. But among boomers who did report plans to splurge, the highest share said that restaurants were where they would treat themselves. Gen Zers continued to selectively splurge, particularly on discretionary categories including apparel and footwear.

European consumers appeared to be less focused on the impact of tariffs compared with their peers in the United States. Instead, they reported relative confidence in their respective economies, mainly due to positive economic indicators within the region. Looking ahead, it will be critical for consumer companies to monitor whether this optimism persists amid shifting global trade dynamics and potential economic headwinds.

ABOUT THE AUTHOR(S)

Jessica Moulton and Pavlos Exarchos are senior partners in McKinsey’s London office, where Gizem Ozcelik is a capability and insights specialist and Nadya Snezhkova is a senior expert; Fleur Porter is an associate partner in the Paris office.

This article was edited by Alexandra Mondalek, an editor in the New York office.

An update on European consumer sentiment: Caution prevails, but some are ready to treat themselves

Across Europe, consumers intend to limit their spending, but they deem some categories to be splurge-worthy.

In the first quarter of 2025, consumers in Europe expressed caution over their respective economies. At the same time, consumers said they maintained their household income, savings, and spending rates from the previous quarter.

The following charts highlight findings from our latest ConsumerWise research, which considers consumers’ overall outlook, trading-down practices, spending intent by category, and willingness to splurge. We cover France, Germany, Italy, Spain, and the United Kingdom (EU-5).

On average, half of consumers in Europe had mixed feelings about the economy. Nearly one-quarter of consumers felt optimistic—though just as many felt pessimistic. This is similar to what consumers reported at the end of 2024. Differences emerged at the country level: For example, consumers in France reported pessimism at the highest rate (32 percent) compared with any of the other countries in our survey. Consumers in Spain, meanwhile, reported optimism at the highest rate (32 percent).

Most consumers across Europe had mixed feelings about their economies.

When surveyed about several economic, political, and social concerns, consumers across Europe ranked rising prices and inflation as their top concern. The share of consumers who reported this among their top three concerns decreased (from 56 percent for EU-5 in the first quarter of 2024 to 47 percent in the first quarter of 2025). Immigration, climate change, and international conflicts also worried consumers.

Inflation, immigration, and climate change were European consumers’ top concerns.

Even though consumers remained concerned about inflation, 61 percent also said their income remained about the same compared with the past three months. At the same time, 38 percent said their spending increased over the past three months, and 43 percent said their savings decreased. These dynamics largely mirrored what consumers reported at the end of 2024.

Most consumers across Europe said they reduced or maintained their savings.

In line with seasonal spending patterns, consumers across European countries expressed their intention to pull back spending on several discretionary categories.

Across several discretionary categories, European consumers expressed their intent to spend less over the next three months.

Food delivery apps, entertainment away from home, and restaurants were three discretionary categories in which consumers expressed an intention to spend less.

As spring nears, consumers reported a predictable increase in spending intentions for home and gardening supplies, as well as in categories related to summer holidays (such as hotel bookings).

It is worth noting that consumers’ intent to spend on travel was higher in the first quarter of 2025 compared with the same period in 2024, though how and where European consumers said they intended to spend on travel varied. Consumers in Spain said they intended to spend more on cruises and hotel stays. Meanwhile, consumers in France and Italy said they intended to spend more on international flights. Compare that to German consumers, who said they planned to increase spending on domestic flights and hotel stays (these same consumers expressed a ten-percentage-point decrease in intent to spend on international flights from the previous quarter). There was one outlier in our data: In the United Kingdom, consumers reported a decrease in intent to spend on most travel-related expenditures.

Roughly the same share of consumers reported trading down compared with the previous quarter. Adjusting the amount they purchase and opting for lower-priced retailers were the two most common trade-down behaviors reported in Europe.

Gen Zers across the five European countries surveyed reported the highest rates of trading down of any age group, followed by millennials. Income played little role in whether consumers across each European nation surveyed reported trading down.

Three-quarters of European consumers said they traded down, often by buying less or buying from a lower-price retailer.

Trading down was prevalent across all income groups, with younger consumers most likely to do so.

Across Europe, about one-third of consumers said they intended to splurge over the next three months. This figure was higher in Germany (43 percent expressed an intent to splurge over the same period).

While there were differences in which categories consumers deemed most splurge-worthy (consumers in the United Kingdom said they intended to splurge on groceries, for instance), we saw bigger divergences by age group. Older consumers were most interested in travel and restaurants, while younger consumers were most interested in apparel. This difference is probably attributable to the growing interest in experiences over products (we tend to see this dynamic grow as consumers age). The cost-of-living squeeze exacerbates this dynamic, since older consumers have usually accumulated more wealth and are better able to afford bigger-ticket splurges.

At the beginning of the year, consumers in Europe expressed sentiment about their spending that largely tracked with seasonal trends. Looking ahead, the outcome of elections in Germany, international relations, and tariffs could affect how consumers across these five European nations feel about their wallets. Check out our ConsumerWise page and contact us for more information and additional insights.

An update on European consumer sentiment: Cautious, but gearing up for the holidays

About the authors

An update on European consumer sentiment: Outlook holds, despite dismay abroad

While US consumers closely tracked tariff news and were less optimistic about their economy, European optimism ticked up marginally, as did intent to spend.

About the authors

An update on European consumer sentiment: Caution prevails, but some are ready to treat themselves

Across Europe, consumers intend to limit their spending, but they deem some categories to be splurge-worthy.

Explore a career with us

Related Articles

Brazilian consumer sentiment: Retail growth amid economic pressures

An update on US consumer sentiment: Settling in for a tepid holiday season