Pubs and restaurants enjoyed a significant boosted spending in 2018 with pub spending growing by 11.2% and restaurant spending growing by 8.7% . Overall consumer spending grew 4.0 per cent year-on-year in 2018, rising slightly from 3.5 per cent growth the previous year, as entertainment bolstered the struggling retail sector.
According to Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, 2018 was a tumultuous year for consumer spending. Factors such as extremes in weather and wider political and economic uncertainty resulted in a series of shifts in purchasing patterns.
Following a steady start to the year, in March consumer spending slowed to just 2.0 per cent as adverse weather caused by the ‘Beast from the East’ kept shoppers at home. This equated to a decline in expenditure in real terms, with growth dropping below the annual rate of inflation.
Summer, however, saw a different story as spending growth surpassed 5.0 per cent for three consecutive months. The ongoing heatwave as well as World Cup fever encouraged consumers to spend on days out and long summer evenings. Autumn then experienced more subdued levels of spending, as Brits balanced their budgets in the run up to Christmas.
Consumers prioritising entertainment
When looking at non-essentials, growth saw a slight increase reaching 3.6 per cent compared to 3.2 per cent in 2017. Spending on entertainment continued to be a priority for consumers, growing by 9.0 per cent as pub (11.2 per cent) and restaurant expenditure (8.7 per cent) remained strong.
Ticket spending saw a year of peaks and troughs, ranging from negative territory to double digits – settling at an average growth of 6.3 per cent for the year. Key ticket sales for Glastonbury Festival (October) and the Spice Girls reunion tour (November) alongside high profile box office releases such as ‘Fantastic Beasts: The Crimes of Grindelwald’ (November) boosted spending by 22.1 and 30.5 per cent respectively in those months.
Struggling retail sector
Spending in the retail sector was in decline. Clothing expenditure reached just 0.7 per cent growth, falling below the rate of inflation and representing a decline in real terms. While family clothing (1.8 per cent) and men’s clothing (3.0 per cent) both saw increases, this was not enough to compensate for women’s clothing declining by 1.7 per cent.
Continuing a trend from 2017, department stores and electronic stores remained under pressure seeing contractions of 3.7 and 3.8 per cent respectively.
Consumer confidence reaches record low
Amidst high-profile closures on the high street and ongoing political and economic uncertainty, consumer attitudes towards the UK economy as a whole were subdued. By October, a record low of just 28 per cent of Brits felt confident in the UK economy.
On a more personal level, the proportion of consumers feeling confident in their own household finances also paled in comparison to previous years, reaching 52 per cent in November – the lowest level since Barclaycard started tracking this data point in March 2015.
Esme Harwood, Director at Barclaycard, said:
“Spending remained relatively robust in 2018, with strong growth in entertainment spending balancing continued struggles on the high street. The weather played a key role, with the long hot summer driving spending, while the colder weather kept consumers from the shops earlier in the year.
“Ongoing political and economic uncertainty has begun to have a marked impact on how people feel about their finances. Confidence in the UK economy and confidence in household finances both dropped to their lowest levels in October and November respectively. Looking ahead, it will be interesting to see how consumers respond to the January sales and what impact the wider environment will have on household budgets and consumer confidence in the New Year