Whilst the UK is approaching its third month under lockdown – the third national lockdown, according to data released on Tuesday, British consumers are spending less but are expressing record levels of confidence.
Payment card firm Barclaycard said on Tuesday that in a commissioned survey of 2,003 people conducted between February 19th and the 22nd, Consumer spending in the UK was 13.8% lower than a year before.
Spending on essential items increased 5.3% whilst online grocery shopping soared. However, spending on non-essentials plunged 22.1% as the effect of many businesses being closed impacted spending habits.
In the three months to February, total food sales grew 7.9% but sales of non-food items dropped by 5.5%.
Outlook Promising
After experiencing its worst annual slump in three centuries in 2020, the UK economy is expected to grow strongly once the COVID restrictions are ended.
Barclaycard said that consumers’ confidence in the wider economy increased by 4 percentage points to 28%. Confidence levels are now at their highest level since the coronavirus pandemic hit last year.
Polling firm YouGov reported that its consumer confidence score increased by two points to 105.4. The increase was fueled by expectations for business activity, house prices and household finances over the next year.
Paul Martin, UK head of retail at accountants KPMG which produces the survey commented:
“Conditions will continue to be incredibly challenging as they face subdued demand, thinner margins and rising logistics costs, alongside the accelerated structural changes to the sector.”
Paul Martin
The UK’s FTSE 100 rose upon the news, gaining 0.33% on the news. Meanwhile, the GBP rose 0.45% against the US Dollar.
