UK consumer spending slides in December as pandemic flares: Barclaycard

[LONDON] British consumer spending fell in December at the fastest rate in six months, with pubs and restaurants especially hard hit by a resurgence of coronavirus cases, a survey showed on Tuesday.

Payment card provider Barclaycard said consumer spending contracted 2.3 per cent in year-on-year terms last month, the biggest drop since June when most of the economy was still in lockdown.

Spending in pubs and bars dropped 71 per cent and fell by 65 per cent in restaurants, the survey showed.

By contrast, spending on groceries soared - something also reported in another survey on Tuesday published by the British Retail Consortium (BRC) trade body.

December had brought some optimism with the beginning of the rollout of coronavirus vaccines.

But vaccinations started too late to stop a surge in cases which earlier this month prompted Prime Minister Boris Johnson to set out a new, tougher lockdown. This will last until at least mid-February and economists think it will tip Britain back into recession.

"Changing restrictions continue to have an impact on our spending habits - which was particularly acute across the high-street and hospitality sectors in December, with restaurants, pubs and bars hardest hit," said Raheel Ahmed, head of consumer products at Barclaycard, part of Barclays.

The BRC survey - which only covers spending in major retail chains, rather than overall consumer spending - showed retail spending increased by 1.8 per cent year-on-year in December, driven by groceries and following a 0.9 per cent rise in November.

For 2020 as a whole spending in stores fell 0.3 per cent, the weakest reading since records started 25 years ago and one which masked a sharp split between grocery stores, where spending rose 5.4 per cent, and other retailers where sales fell 5.0 per cent.

"Christmas offered little respite for these retailers, as many shops were forced to shut during the peak trading period,"said Helen Dickinson, BRC chief executive.

REUTERS