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 22 January and 25 January by Longitude Research, while the card data covered 25 December to 22 January. The BRC figures covered 3 January to 30 January.
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.