Modest Growth In Hospitality Spend As Consumers Cut Back On Spending Pre-Budget

Consumer card spending fell -0.8 per cent year-on-year in October, a slight drop from September (-0.7 per cent), and considerably lower than the latest CPIH inflation rate of 4.1 per cent.

However, hospitality & leisure sector saw modest growth of 1.2 per cent, led by entertainment (4.7 per cent) and travel agents (7.2 per cent), which have rebounded in response to consumers’ demand for financial protection when booking holidays.

Golf clubs, however, emerged as the month’s standout success story, enjoying growth of 21.3 per cent, following Team Europe’s historic victory in the Ryder Cup.

Essential spend declined (-2.5 per cent) for the sixth consecutive month, while growth in discretionary spending was flat (0.1 per cent), as a combination of pre-budget anticipation, upcoming Black Friday deals and milder weather led consumers to delay purchases or cut back across a number of categories.

In October, all seven measures of consumer and economic confidence tracked by Barclays declined for the first time since August 2022, when the Bank of England announced its biggest base rate increase in 27 years.

Confidence in the strength of the UK (22 per cent), European (28 per cent) and global (23 per cent) economy all declined month-on-month, however confidence in household finances fell most significantly, from 74 per cent to 63 per cent. The proportion of those confident in their job security and ability to spend on non-essential items both reached their lowest points since 2023, at 44 per cent and 51 per cent respectively (down from 47 per cent and 60 per cent in September).

Those lacking confidence in household finances cited the cost of living (54 per cent), a pessimistic outlook for the year ahead (41 per cent), and inflation outpacing wage growth (30 per cent) as their top causes for concern. In contrast, those who do feel confident listed having little or no debt (58 per cent), careful budget management (50 per cent) and having a savings buffer (43 per cent) as the main contributing factors. Baby boomers are the most likely generation to say they’re confident in their household finances, at 71 per cent.

In anticipation of the Budget, two fifths of consumers (41 per cent) are adjusting their finances. Of this group, 37 per cent are making cutbacks to reduce spending, 33 per cent are putting off discretionary purchases and 30 per cent are building up a savings buffer. One third (33 per cent) overall say they’re holding off on making major financial decisions until after the Budget, rising to 44 per cent for Gen Z.

Almost six in 10 (57 per cent) consumers say they’re spending more on groceries in comparison to last year, estimating their household now spends £74.70 weekly on average. One in four (23 per cent) households report spending over £100 per week, while 16 per cent manage to cap spending at £30 or less.

Three in four shoppers (74 per cent) have noticed food products they buy becoming more expensive in recent months, while 61 per cent have noticed the rise of ‘skimpflation’, where the quality of certain products or ingredients declines, without a corresponding drop in price.

Two thirds (65 per cent) report that festive food and drink products – such as biscuit tins and chocolate tubs – have been impacted by ‘shrinkflation’ and are getting smaller, but cost the same or more than they used to.

The overall retail category recorded its steepest fall (-0.5 per cent) since November 2024 with clothing (0.1 per cent) flat, and department (-7.8 per cent) and discount stores (-7.6 per cent) both in decline. The mild Autumn weather led shoppers to delay seasonal purchases, while 26 per cent said they’ve been saving money to spend during the Black Friday/Christmas sales period. New clothes and accessories emerged as the top non-essential cutback in October, chosen by 53 per cent of those who say they’re reducing their discretionary spending (48 per cent).

Julien Lafargue, Chief Market Strategist, Barclays Private Bank and Wealth Management, said:
“Consumers and businesses alike appear to have adopted a ‘wait and see’ approach ahead of the Autumn Budget. While this is generating some short-term headwinds, it could position the UK economy for a rebound once the uncertainty lifts, potentially setting the stage for a strong festive season.”

Karen Johnson, Head of Retail at Barclays, said:
“Looking ahead to the Autumn Budget, consumers are taking a considered approach to spending. While confidence declined in October, we’re seeing resilience within categories linked to health and wellbeing, suggesting people are still willing to invest in the areas that matter most to them. With Black Friday and Christmas on the horizon, we expect spending patterns to shift again as shoppers seek out value and seasonal offers.”