Consumer confidence in the UK has stabilised in March following February's record low, with Generation Z showing particularly positive spending intentions across all retail categories.

According to new data from the British Retail Consortium (BRC)-Opinium Consumer Sentiment Monitor, expectations for the overall economy improved slightly to -35 in March, up from -37 in February, while personal financial situation expectations edged up to -10 from -11.

Most notably, expectations for personal retail spending rose to 0 in March from -5 in February, with overall personal spending expectations increasing significantly to +11 from +4.

Helen Dickinson, chief executive officer of the British Retail Consortium, said: "Consumer confidence stabilised this month after February's record low. This was coupled with an increase in spending expectations for the three months ahead, both for retail spending and spending more generally."

The data revealed a stark generational divide in spending intentions. Those aged 18-27 (Gen Z) expect to increase their spending across all categories in the coming months, while those aged 44-59 (Gen X) are planning the biggest spending cuts for most items, excluding food.

"Within retail, spending expectations for DIY and home improvements moved into positive territory for the first time," Dickinson noted. "Food and grocery spending expectations continued to outperform other categories, hitting a new high, though this could also be due to the expectation of rising prices."

The stabilisation comes just ahead of the Spring Statement, scheduled for 26 March 2025, where Chancellor Rachel Reeves is expected to announce measures to address the budget deficit.

Retailers are urging government action amid mounting cost pressures, with Dickinson warning: "In a matter of weeks, retailers grapple with the reality of billions in extra costs from the increases to employer National Insurance and the National Living Wage. This £5bn in new costs will give many no option but to push prices up."

She cautioned that food inflation could reach 5 per cent by year-end, with additional costs from the new packaging tax and implementation of the Employment Rights Bill potentially pushing prices up further.

"Without a much needed confidence boost from government, the scale of new costs will see retail investment fall further, holding back future growth in the economy," Dickinson concluded.

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