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Consumer spending slumped more than a third in April

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Consumer spending shrunk 36.5% year-on-year in April, data from Barclaycard reveals.

Spending on essential items declined 7.5%, largely attributed to a 59% fall in fuel spend, data from Barclaycard – which sees nearly half of the nation’s debit and credit transactions – revealed.

However, supermarket sales were boosted, climbing 14.3% as Brits made larger shops and prepared more meals at home.

Spending on non-essentials fell 48% with travel seeing an 87% fall while bars, pubs and clubs suffered a 97% decline.

But specialist food and drink stores such as off-licences, greengrocers, independent convenience stores, butchers and bakeries saw 38% growth.

Barclaycard said Brits continued to support local businesses, with more than half (57%) saying the current environment has made them realise how much they value these stores.

Home improvement and DIY spending dropped 43% but Brits took to the internet for items to spruce up their property and gardens with this category seeing a 27% rise.

Digital subscriptions also increased with growth of 50%. Online spend for eating and drinking, including takeaways, saw growth of 25%.

Savings on the up

Barclaycard said with many shops closed and much of the nation not commuting, nine in 10 UK adults have saved money on everyday expenses since the lockdown began.

Nearly a third (31%) are putting money into savings; 23% towards their next holiday; and 9% are planning to buy their family a treat.

As a result, the UK’s confidence in household finances remains at a robust 70%, rising to 85% for those aged 55.

However, despite the positivity, consumer confidence in the UK economy overall has dropped to its lowest level for at least six years: just 20% of adults feel positive – a 5% decrease from last month.

Confidence in job security also fell to its lowest level for 17 months to 42%.

Esme Harwood, director at Barclaycard, said: “It’s been a tough time for retailers as consumer spending has dropped considerably under lockdown. There are some bright spots, though, as Brits have turned their focus online and looked to takeaways, digital subscriptions and DIY to keep entertained and occupied.

“A renewed sense of community may be welcome news for independent businesses, with a growing desire to support local stores in life after lockdown.”

‘Reassess spend on throw-away items’

Svenja Keller, head of wealth planning at Killik & Co, said: “As we start to see non-essential shops such as fashion and homeware retailers open as early as June, we’ll reach a critical point in knowing if consumer spending habits return as we tip-toe back to normality, or if we’ll see a sustained level of cut-down on discretional spending.

“Many have reported seeing an increase in their bank balances at the end of the month, and now is a good time to reassess how much we spend on throw-away items. While we can still treat ourselves, this period may have taught us that some discretionary spend should be re-directed towards long-term savings and investments towards our ambitions and goals.”

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