Barclays consumer spending drops for first time since 2024
Consumers using Barclays credit and debit cards cut their spending for the first time in 17 months in the latest sign of turmoil facing the global economy.
Total spending was down 0.1 per cent year-on-year marking the first drop since November 2024, where Brits were feeling the pinch of Labour’s first Budget.
Consumers mainly drew back on non-essentials with a fall 0.3 per cent. But essential spending grew 0.3 per cent, with a major driver coming from a 10.4 per cent surge in fuel – the greatest rise since December 2022 – as consumers stocked up amid the dramatic rise in oil prices.
It comes after oil breached a four-year high of $126 a barrel only a few weeks ago. The price of crude has continued to climb after the conflict in the Middle East choked supply, with traffic through the Strait of Hormuz, where a fifth of the world’s supply flows through, becoming halted.
Jack Meaning, chief UK economist at Barclays, said: “This data shows consumers are already adapting in response to the shock from the Middle East, for instance, by building up a savings buffer.”
Blow to businesses as confidence drops
Confidence in the global economy hit a one-year low at 20 per cent, whilst confidence in the UK economy only marginally ticked up to 22 per cent from 21 per cent last month.
“With uncertainty high both at home and abroad, it is unsurprising to see confidence falling,” Meaning said.
“The key unknown for the UK outlook is how long this uncertainty will last. If confidence remains subdued for too long, and consumers continue to limit their spending as a result, it will be a challenge for households and businesses to weather the storm.”
Businesses have continued to send major warning signals over the dramatic surge in prices following the outbreak of war in the Middle East.
The UK’s best-known pub chain Wetherspoons said it could miss profit targets over “substantial increases in costs,” as pubs brace for soaring energy and shipping prices due to the Iran war.
Meanwhile, JD Sports said it was preparing for “muted market growth” in the coming year, “shaped by a weaker spending outlook”.
Barclays data showed travel spend was among the sectors hit the highest with spending falling 5.7 per cent as consumers holiday plans were derailed by growing fears of a jet fuel shortage.
Spend on airlines fell 8.3 per cent in April. Heathrow revealed fewer passengers travelled through its airport last month with volumes falling five per cent in April to 6.7m.
Blame was put on the “ongoing impact of the Middle East conflict”, with travellers heading to that region dropping by 50 per cent.