Christmas fear for UK restaurateurs as Brits cut back on dining out to heat their house
Spending on dining out and clothing is expected to slow in the run up to Christmas as customers put off purchases to help offset rising energy bills, spelling fresh pain for UK businesses.
According to a new report from Barclays close to half of consumers say they are planning to cut down on discretionary spending so they can afford their energy bills throughout the autumn and winter.
Some 56 per cent of respondents said they would cut back on eating out at restaurants and half said they plan to put off buying new clothes and accessories for day-to-day wear.
The impact of customers counting their pennies has hit the UK’s hospitality industry hard in recent months. In October, transaction growth for UK restaurants contracted to -15 per cent.
Clothing retailers have also been hit particularly hard by not only a slowdown in consumer spending but also unseasonable weather in both the summer and winter which has stopped shoppers from buying new clothes.
New figures from the British Retail Consortium (BRC) show that non-food sales decreased 1.0 per cent on a total basis over the three months to October. This is below the 12-month average growth of 0.6 per cent.
Paul Martin, UK Head of Retail, KPMG, said: “Retailers are facing a challenging Christmas, competing for a shrinking share of wallet, driven by promotions that will no doubt cut into already stretched margins.”
It comes as the British public is bracing itself for another bleak winter as reports suggest that energy bills will not show signs of cooling anytime soon.
According to reports by both Cornwall Insight and Investec are now predicting the energy price cap —currently set at the current £1,834 for average use — will increase for the rest of 2024 rather than easing.
In the last month, the ongoing Israeli–Palestinian conflict has impacted oil prices and there are fears prices could rise further if the war broadens.
News of people looking to cut back on spending will be worrying news for the UK’s high street businesses, which have had their profits gobbled up by soaring costs.
Jack Meaning, chief UK economist at Barclays, said: “It looks as though the oomph continues to go out of squeezed UK consumers.
“The latest transaction data shows they are pulling back from discretionary spending and increasingly worried about their future ability to spend, adding to the picture painted by other data.”
He added: “Third-party consumer confidence data showed a significant drop in October, coming off the back retail sales contracting significantly in September.
“While some of these effects might be being amplified by unseasonal weather, it’s hard to dismiss the growing evidence.”