Exclusive: Richer London boroughs suffer biggest fall in lockdown spending
Some of London’s most prosperous boroughs suffered the biggest falls in spending during lockdown and saw a more sluggish recovery as richer households’ lifestyles were curtailed, while less affluent areas saw a smaller drop, data provided exclusively to Morning Wire has suggested.
Yet some of the richer boroughs – where residents have thriving food scenes on their doorstep and more spare cash – did the best from the Eat Out to Help Out scheme in August, according to card payments and bank transactions tracked by Fable Data.
The data provided by Fable is fast and experimental, so any conclusions should be drawn cautiously. But it gives an insight into what has happened to the London economy during the coronavirus crisis.
Consumer spending plunged April as the capital was locked down, to 33 per cent below its 2019 level.
It climbed considerably in June before falling back again slightly in July. But it then soared in August to 11 per cent above the same month in 2019 as confidence returned.
Richer households slash spending
However, the data also shows how differently London boroughs experienced lockdown.
In the richer boroughs of Islington, Camden and Greenwich, spending fell very sharply in April. It was then slow to pick up in May and June.
Yet in less affluent boroughs such as Enfield, Haringey and Redbridge, spending fell by less compared to a year earlier. It then recovered more quickly.
“It looks like the lockdown forced more prosperous households to cut back on their spending, since meals out and other outings became impossible,” said Lore Campbell, data analyst at Fable.
She said lockdown “had no such effect on households with less discretionary income”. In fact, they “had to spend more for groceries and so on with the initial panic buying and subsequent supply chain disruptions”.
For example, in Islington spending plunged to 50.7 per cent below its 2019 level in April. It then recovered to 37.2 per cent below where it was a year earlier in May. A similar trend occurred in Camden.
In Redbridge in east London, however, spending fell 22.1 per cent year on year in April. And it rose to 14 per cent below where it was a year earlier in May. In Enfield in May, spending was just eight per cent down year on year.
Change in year on year spending by London borough
Eat Out to Help Out boosts richer areas
That is not to say that richer boroughs have suffered more economically during the pandemic. More affluent households have overall saved more, while poorer families have had to eat into any reserves and are more likely to have lost their jobs.
But it does highlight something the government is worried about: that the disruption to normal spending patterns has hurt the restaurants, cafes, pubs, and shops that are the bedrock of city economies.
Nick Stamenkovic, senior economist at Natwest, said: “The shift toward working from home has led to significant disruption in commuting patterns.” He added: “That’s clearly had a dampening impact on footfall and retail.”
It appears that the government’s Eat Out to Help Out scheme was effective in this regard. Fable’s data shows that spending on food and drink shot up to just 9.8 per cent below its 2019 level in August, compared to a 39.1 per cent gap in July.
The data suggests the scheme encouraged people in more affluent areas to go out and spend. Southwark, Islington, Hackney, Hammersmith and Fulham, and Wandsworth were all in the top 10 boroughs for consumer spending in August.
“The Eat Out to Help Out scheme has definitely provided a filip,” said Stamenkovic. “But as that has now ended… I doubt that trend will be sustained in coming months.”