Barclays tells customers of 18-month low and says 'it is still reeling'

Non-essential spending growth has hit an 18-month low in March, but cinemas and pubs benefitted from blockbuster releases and major sporting events. New Barclays data shows rent and mortgage payments increased by just 1.8 per cent, far below the peak of 12.2 per cent, recorded in June 2023.

The Six Nations and St Patrick’s Day boosted pubs, while cinema spending reached a 2024-high on 2 March, due to the much anticipated release of Dune: Part Two. The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending.

Karen Johnson, Head of Retail at Barclays, said: “Retailers were braced for a more subdued start to 2024, and recent figures are in line with expectations. The wet weather has been a key factor in the slowdown in discretionary spending, as it’s meant fewer visits to the high street and to hospitality venues.

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“However, in spite of this initial lull, many retailers are confident that spending will rebound in the coming months, particularly in anticipation of better weather, the energy price cap drop, an uplift in the National Minimum Wage, and the buzz around major events such as Taylor Swift’s Eras Tour and the Paris 2024 Olympics.”

Mark Arnold, Head of Savings & Mortgages at Barclays UK, said: “Non-essential spending is still reeling from last year’s spike in housing costs, which caused both homeowners and renters to cut back while looking for additional sources of income – such as delaying renovations and renting out spare rooms.

“However, there are reasons to be optimistic – our data shows that housing costs are stabilising, the inflationary tide is easing, and interest rates are predicted to fall over the coming months, all of which should translate into increased consumer confidence and spending.”

Jack Meaning, Chief UK Economist at Barclays, said: “While still only tentative, the signs that the UK economy is expanding into 2024 continue to build. With an expectation that the Bank of England will cut interest rates from June, and banks responding by reducing mortgage rates, our research suggests that the housing costs that have been a drag on consumers for over a year are on the cusp of a turn, and will become a boost to spending from H2 and beyond. Today’s data shows this transition happening in real time.”