‘Drop in consumer spending largest in 5 years’

Economy News Whitehall

Consumer spending in the United Kingdom contracted by over a third last month as a result of retail shops shutting to reduce the impact of the coronavirus on their businesses.

Data from Barclaycard—Britain’s largest credit and debit card provider—showed that consumer spending in April plunged by as much as 36.5% as compared with the same period last year. It was so far the largest contraction in five years following a 6% drop in March.

The decline was despite the surge in spending across grocery stores and online shops.

Barclaycard attributed the drop to the nearly halved spending from the travel market coupled with a 97% decline in sales of clubs, pubs, and bars. The said market is expected to take a longer beating after the UK government announced in its lockdown exit roadmap that such industry would be the last to reopen.

Consumer spending on non-food items such as fashion outlets, jewellery shop, and furniture also collapsed during the period.

Meanwhile, UK households spent 50% on subscribing to digital content, television, and games streaming services, surpassing that of increasing spending in supermarkets which was at 14.3%, and in online spending at 25%.

Covering periods April 1 to April 24 or the most updated insight of the hit to consumption, Barclaycard’s data imply that Britain’s economic growth will be largely tempered than what was estimated by the Bank of England.

Commenting on the figures, Barclaycard Director Esme Harwood 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…to keep entertained and occupied,” he added.

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

According to a survey of 2,000 adults conducted by Barclaycard, nearly nine out of 10 adults spent their money on essential goods since the lockdown began.

Meanwhile, confidence over job security plunged to 42%.

For her part, British Retail Consortium Chief Executive Officer Helen Dickinson cautioned that some businesses will be inclined to permanently close and would in turn threaten jobs and local communities without any state-backed support.

“[The UK government’s lockdown exit roadmap] was an opportunity missed to provide a clear and detailed roadmap, outlining when and how shops will reopen after 1 June, so that retail can help get the economy moving and the public can get all the goods they need,” she said.

Leave a Reply

Your email address will not be published. Required fields are marked *