Consumer spending picks up, but confidence in the economy is low
Last year, the ‘Beast from the East’ kept spending low as shoppers stayed indoors. This March, non-essential expenditure grew 3.4% year on year, while essential expenditure rose 2.2%, according the latest consumer data from Barclaycard.
In spite of these strong figures, confidence in the UK economy has fallen to its lowest level since 2014. Seven in ten (69%) saying they are not confident in the current environment. Three in ten consumers are concerned that the cost of everyday items will increase and 17% are worried about medicine shortages. Almost half of Brits (46%) are worried that their quality of life will decline due to Brexit.
Among non-essential spending, pubs and restaurants saw the strongest growth in March, recording uplifts of 15.1% and 12.1% respectively. Garden centre spend increased 34.2% year-on-year.
In contrast, clothing retailers continued to be weak, as sales saw their sixth consecutive month of decline. Department store spending also contracted 4.7% as the retail sector continues to face challenges. This has been seen in problems in key department stores such as Debenhams.
Esme Harwood, director at Barclaycard, said: “In contrast to the extreme weather conditions experienced last year, a milder March resulted in an uplift in spending, with consumers dining out and making the most of the welcome sunshine.
“Despite this, underlying sentiment is cautious. March was characterised by ongoing uncertainty around Brexit, with consumers concerned about an impact on food prices and supplies. In light of this, consumer confidence in the UK economy is the lowest it’s been since we began recording this data.”
Laura Suter, personal finance analyst at investment platform AJ Bell, said the never-ending Brexit process was causing uncertainty for many: “Barclaycard’s latest data shows that 70% of people aren’t confident about the current environment, with half of Brits thinking Brexit will lead to a decline in their quality of life.
“Despite this, Brits are not stopping spending on nights out, with pubs and restaurants seeing a big boost in sales, thanks to the better weather at the start of this year compared to the Beast from the East last year. However, essential spending has dropped as people keep an eye on the pennies, once you take into account petrol spending, with Brits continuing to hunt out cheaper supermarkets and deals at the checkout.
“As Debenhams’ woes continue, it will surprise no-one that the high street continued to have a tough time in March, with spending in department stores down again, and clothes retailers seeing their sixth month in a row of falling spend.”