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