The news: Consumers in the UK and Europe are keeping a tighter grip on spending due to inflation fears and persistent economic uncertainty.

• Eurozone households saved roughly 15% of their disposable income in 2025, up from the pre-pandemic rate of around 12.5%, according to The Wall Street Journal.
• The UK savings rate is almost double its level before the pandemic, while household consumption has risen just 2% since 2019.

Zoom out: Those trends are pressuring European retailers.

• Primark’s same-store sales fell 3.6% in Europe and 0.2% in the UK and Ireland in its most recent quarter, and the retailer cited weak consumer confidence that has been exacerbated by the war in the Middle East.
• UK consumer card spending declined 0.1% YoY in April, the first contraction since November 2024, as a drop in nonessential spending outweighed a fuel-driven increase in essential expenditures, according to Barclays.

As in China, the challenge for European retailers is not consumers’ ability to spend, but their choice to save amid unyielding uncertainty. Nearly half of European consumers polled by Boston Consulting Group said their top priority would be saving if their income increased 10% to 15%. That same survey found that while only 28% of Europeans rate their personal financial situation as bad, 56% are pessimistic about the economy, which could heighten frugal behaviors.

Implications for retail: Unlike in the US, depressed consumer sentiment in Europe is weighing on retail sales. The lingering toll of high inflation coupled with geopolitical tensions is driving European consumers to prioritize essentials over discretionary spending and wait for discounts before pulling out their wallets.

Overcoming these shoppers’ reluctance will require retailers to strengthen their value proposition—and make sure it’s communicated clearly via their marketing and messaging.

Another option would be to expand in the faster-growing US retail market. That’s the path Primark has taken: It now has 44 US stores, including a recently opened New York City flagship that is driving brand awareness.