UK Card Spending Drops At Fastest Rate In Nearly 5 Years Following Budget
Recent data from Barclays indicates a 1.1% year-on-year decline in card spending in the UK, marking the most significant decrease since the early months of 2021. Despite a notable 62.5% increase in spending during Black Friday, overall figures for…
Recent data from Barclays indicates a 1.1% year-on-year decline in card spending in the UK, marking the most significant decrease since the early months of 2021. Despite a notable 62.5% increase in spending during Black Friday, overall figures for November did not reach expected levels.
Factors Contributing to Reduced Consumer Spending
Several economic factors have contributed to the current spending slowdown. Inflation remains high, accompanied by increased taxes and stagnant wages, reducing consumer purchasing power. Food spending rose by only 3%, which falls short of the 3.6% inflation rate. Non-food items experienced a marginal increase of 0.1%, compared to a 12-month average increase of 1.6%. Additionally, pub spending decreased by 1.5%, indicating challenges in the hospitality sector.
Economic Conditions Impacting Consumer Behavior
November's economic environment contributed to consumer caution. The cost of living remains elevated, and the UK unemployment rate rose to 5.0% in the three months leading to September 2025. Consumers also awaited the Autumn Budget for potential tax changes, which indeed resulted in a freeze on income tax thresholds until 2029. This decision could push more individuals into higher tax brackets.
Despite a notable 62.5% increase in spending during Black Friday, overall figures for November did not reach expected levels.
The current decrease in consumer spending reflects sensitivity to economic shifts. The potential for a reduction in interest rates by the Bank of England is under consideration to stimulate spending. However, maintaining a balance is crucial to prevent exacerbating inflation, which could worsen the cost-of-living crisis.
Barclays' spending data highlights concerns regarding the UK economy. The combination of inflation, living costs, and tax burdens increases economic uncertainty. The 2025 Autumn Budget promises more funding for public services but imposes a higher financial burden on the workforce. The potential for interest rate adjustments may stabilize the economy, but the outcome remains uncertain.
Based on reporting by techround.co.uk.