UK Consumer Spending Plunges As New Lockdown Bites: Barclaycard
Spending by British consumers plunged in January at the fastest rate in seven months as the country went back into a tight COVID-19 lockdown, payment card firm Barclaycard has said.
A 73% annual increase in online retail spending and record demand for takeaway food - which jumped by a third from a year ago - failed to compensate for the closure of many businesses.
Overall consumer spending shrank by 16.3% in year-on-year terms last month, Barclaycard said, the biggest drop since May when the country was starting to emerge from its first lockdown.
Spending in pubs and bars dropped nearly 94% and was down by more than 84% in restaurants, the survey showed. Travel agents also reported an 87% drop in spending during a month when many Britons would normally book summer holidays abroad.
By contrast spending at supermarkets soared by 17% as people prepared more food at home.
The difference in spending patterns was reflected in a separate survey on Tuesday published by the British Retail Consortium (BRC) trade body.
It said overall retail spending at major retail chains fell by 1.3% in January compared with the same month last year.
Over the three months to January, food sales were up nearly 8% while non-food sales were down 5.6%.
"The current lockdown has hit non-essential retailers harder than in November, with the new variant hampering consumer confidence and leading customers to hold back on spending – especially on clothing and footwear," Helen Dickinson, BRC chief executive, said.
Barclaycard said a survey it commissioned showed only 40% of respondents felt secure in their jobs, down from 50% in January last year and the lowest proportion in over a year.
The survey of 2,001 people was conducted between Jan. 22 and Jan. 25 by Longitude Research, while the card data covered Dec. 25 to Jan. 22. The BRC figures covered Jan. 3 to Jan. 30.
The Bank of England predicts Britain's economy will shrink by 4% in the first three months of 2021, largely due to the new lockdown. But it says pent-up savings among people stuck at home could fuel strong growth later this year when the rollout of COVID-19 vaccinations allows restrictions to be lifted.