UK Consumer Spending Drops for First Time Since Late 2024, Says Barclays Data
Analysis of Recent UK Consumer Spending Trends
Impact of the Iran War on Consumer Behavior
May 12 (Reuters) - British consumers, shaken by the widening economic fallout from the Iran war, cut their spending last month for the first time since November 2024 as they focused on essentials rather than leisure, a survey showed on Tuesday.
Barclays and BRC Survey Findings
Barclays Card Spending Data
Barclays said spending on its credit and debt cards fell by 0.1% in annual terms in April after a 0.9% increase in March. Its survey showed heavy declines in spending on hotels and travel.
British Retail Consortium (BRC) Retailer Survey
A separate survey of retailers from the British Retail Consortium showed a sharp drop in store spending last month, albeit distorted by the timing of the Easter holidays.
Spending on Big-Ticket Items
Both surveys showed a reduction in spending on big-ticket items as households adopted a cautious financial stance. The readings chimed with other gauges of the consumer economy that show faltering morale.
Expert Insights on Consumer Confidence
Barclays Economist Commentary
"This data shows consumers are already adapting in response to the shock from the Middle East, for instance, by building up a savings buffer," said Barclays chief UK economist Jack Meaning.
"With uncertainty high both at home and abroad, it is unsurprising to see confidence falling."
BRC Analysis of Retail Sales
The BRC said retail sales fell by 3.0% in annual terms in April, after a 3.6% rise in March. Taking March and April together - to account for the different timings of Easter this year and last year - retail sales were up 1.5% on the year.
"But weak consumer confidence also played a role as fears about the Middle East conflict driving up living costs led shoppers to rein in," said BRC chief executive Helen Dickinson, citing weak readings for sectors like furniture.
Travel and Future Outlook
Travel Sector Spending
Barclays said card spending on travel dropped by 5.7% in annual terms.
Economic Uncertainty and Projections
"The key unknown for the UK outlook is how long this uncertainty will last," Meaning said.
"If confidence remains subdued for too long, and consumers continue to limit their spending as a result, it will be a challenge for households and businesses to weather the storm."
Reporting and Editorial Credits
(Reporting by Andy Bruce; editing by Suban Abdulla)
