UK consumer spending drops in rainy July

British shoppers curtailed their spending in July due to rainy weather, as reported by two surveys on Tuesday. Barclays recorded a 0.3 per cent annual decline in credit and debit card spending, following a 0.6 per cent drop in June.

While England’s men’s soccer team reaching the Euro 2024 final boosted public spending and some consumers stocked up for barbecues, two out of five people surveyed by Barclays cited the weather as a reason for reduced spending.

This drop contrasts with price growth, which is running at around 2 per cent, according to official inflation data.

The British Retail Consortium noted a 0.5 per cent increase in sales values from July 2023, up from a 0.2 per cent decline in June, but still below the 1.4 per cent average rise over the past year. Both surveys showed a decline in non-essential spending.

Barclays’ chief UK economist, Jack Meaning, noted that despite fluctuations from weather and events, there is a general recovery in spending power and consumer confidence. With the Bank of England beginning to cut interest rates, he expects stronger spending growth later in the year and into 2025.

The UK economy has emerged from a brief recession and is projected to grow by 1.25 per cent in 2024, potentially outpacing France, Germany, and Italy, according to the Bank of England. New Prime Minister Keir Starmer aims to double this growth rate.

However, while confidence in the UK economy reached its highest since February 2022, the Barclays survey revealed that many people remain concerned about their household finances, particularly rising water utility bills announced in July.

Attribution: Reuters