Data released by Visa has revealed that spending fell 0.8% in May, the first reduction recorded since September 2013. Half of the eight of its spending categories saw a spending fall, with food and drink recording a 0.6% dr.
Furthermore, a poll of 700 Institute of Directors members revealed a “dramatic drop” in confidence following the hung parliament.
According to IoD director-general Stephen Martin the current political instability could have dire consequences for the UK economy.
Speaking to the BBC he said: “The needs of business and discussion of the economy were largely absent from the [general election] campaign, but this crash in confidence shows how urgently that must change in the new government.”
Kevin Jenkins, UK & Ireland Managing Director at Visa commented:
“Consumer spending fell for the first time in nearly four years in May, following some marked slowdowns in growth since the beginning of the year. Our Index clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze.
“Retailers of non-essential goods were among the worst hit, with clothing and household goods seeing sharp declines in sales. The experience sectors continued to record some growth, though at much softer rates, suggesting consumers were reining in their discretionary spending.
“Bricks-and-mortar retailers had a particularly challenging month, with sales dropping at the quickest level in over five years, at a time when warmer weather and the May bank holidays would usually drive shoppers on to the high street. Online retailers, on the other hand, fared well, with spend up 6.9%.”
Josh Beer, The Illustrious Pub Company, Cambridgeshire:
More of our customers gravitated towards deals and offers in the past month, it feels as though they were biding their time, and cutting back until they became more confident in the economy. We also face other challenges – price rises and minimum wage increases in particular are forcing us to explore ways to make our business more cost-efficient. We’ve scaled back our services and no longer offer add-ons such as contract catering.