UK consumers reduce travel spending for the first time in five years, driven by cost-of-living pressures and the escalating Middle East conflict. Barclays data reveals overall card spending rose 0.9% year-on-year in March, slowing from February’s 1% gain.
Sharp Decline in Travel Categories
Travel expenditures fall 3.3% last month—the first drop since March 2021—as travelers delay overseas trips or switch to domestic getaways. Spending at travel agents decreases 4.6% annually, airlines see a 4.1% dip, and public transport usage drops 2.9%. Meanwhile, hotel and accommodation bookings climb 1.2%, fueled by staycations and Easter holiday demand.
Middle East Conflict Fuels Caution
The Middle East conflict, which ignited in late February after US-Israeli strikes on Iran, leads one in seven adults to postpone major purchases and bolster savings against anticipated energy price hikes. The energy regulator cuts gas and electricity bills by 7% starting April 1 via a lower price cap, but forecasts point to an 18% surge in July due to elevated wholesale costs.
Essentials and Discretionary Spending Trends
Essential spending on food and petrol edges up 0.5%, with fuel purchases jumping 1.6%—the first increase since February 2023—amid soaring oil prices. Non-essential discretionary outlays grow at a slower 1.1% pace, though clothing rises 3.6% and entertainment 3.5%. Cinema visits surge 5.5%, propelled by hits like Ryan Gosling’s Project Hail Mary and Pixar’s Hoppers.
Shoppers delay major purchases and build savings buffers in response to Middle East shocks, signaling muted activity ahead, said Jack Meaning, chief UK economist at Barclays. With a Bank of England interest rate decision looming in under three weeks, holding rates best balances softening growth and persistent inflation.
Shifting Consumer Confidence
Most adults express confidence in household finances (67%) and living within means (71%), yet pessimism grows on the broader economy. Only 21% feel positive about UK and global outlooks, down from 25% and 24% in February.
March data shows a gap between consumer sentiment and actual spending, noted Karen Johnson, head of retail at Barclays. Cost concerns and uncertainty spur caution, but resilience persists in clothing, entertainment, and digital subscriptions as people prioritize key areas.
Retail Sales Surge on Easter Boost
British Retail Consortium figures indicate UK retail sales climb 3.6% year-on-year in March, topping last year’s 1.1% and the 12-month average of 2.6%. Food sales lead with a 6.8% increase.
An early Easter lifts food sales as families gather, said Helen Dickinson, chief executive of the British Retail Consortium. Non-food varies: strong demand for computers, toys, and homeware offsets weakness in clothing and footwear. Middle East travel disruptions also curb sales of travel goods.
