Headlines
UK consumer spending slows ahead of Reeves budget, retailers say
Published by Global Banking & Finance Review®
Posted on October 13, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 13, 2025
2 min readLast updated: January 21, 2026
UK consumer spending growth slowed in September due to budget uncertainty and rising energy costs. Retailers face challenges as consumer confidence remains high.
LONDON (Reuters) -British consumer spending grew by the least in four months in September as uncertainty ahead of finance minister Rachel Reeves' budget next month and rising energy bills deterred shoppers, a survey showed on Tuesday.
The British Retail Consortium said spending in shops increased by 2.3% in annual terms, below August's 3.1% growth and the weakest rise since May.
Separate data from Barclays showed a drop in a broader measure of consumer spending in September.
"Rising inflation and a potentially taxing budget is weighing on the minds of many households planning their Christmas spending," BRC Chief Executive Helen Dickinson said, adding firms faced a dilemma for the busy end-of-year period.
"Retailers also face difficult decisions about investment and hiring over the Golden Quarter given uncertainty over business rates bills arriving in April."
The brunt of tax hikes announced last year by finance minister Rachel Reeves fell mostly on businesses while consumers were hit this month by a 2% increase in already high energy prices.
In its report, Barclays said spending on debit and credit cards fell by 0.7% in annual terms in September after August's 0.5% increase.
Spending on essential items fell by 2.6%, the fifth monthly decline in a row. Growth in spending on non-essential items was the weakest in 15 months at 0.2%.
Barclays' measure of households' confidence reached a four-year high at 78% with sentiment around personal finances the highest in seven months as wages continued to outpace inflation.
But nearly half of consumers surveyed by the bank said they were changing their spending habits in anticipation of next month's budget and a third of those were building up savings.
Barclays spending data was based on debit and credit card spending between August 23 and September 26, while the consumer sentiment data was based on a survey of 2,000 people conducted from September 26-30.
The BRC data covered sales made between August 31 and October 4.
(Reporting by Suban AbdullaEditing by William Schomberg)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
Essential items are goods and services that are necessary for basic living, such as food, clothing, and shelter. Spending on these items often remains stable even during economic downturns.
A budget is a financial plan that outlines expected income and expenditures over a specific period. It helps individuals and organizations manage their finances effectively.
Consumer confidence is a measure of how optimistic or pessimistic consumers are regarding their expected financial situation and the overall economy. High confidence typically leads to increased spending.
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