New data from NatWest reveals that UK consumers have been significantly reducing their car journeys to cut fuel costs and scaling back on dining out in response to the economic uncertainty stemming from the Iran conflict. The bank's customer data shows a 10-20% decline in fuel purchases compared to a year ago, with the most pronounced reductions among those over 65. Spending on eating out has also dipped by approximately 3.5%, as consumers increasingly seek value for money.
Mortgage Market Sees Surge
The Iran conflict, which has raised the spectre of interest rate hikes, prompted a rush in mortgage activity in March. NatWest reported receiving around 4,000 mortgage applications in a single day—six times its typical daily volume—as borrowers sought to lock in lower rates before further increases. Separate data from the Bank of England confirmed that mortgage approvals for homebuyers jumped to a four-month high in March, reflecting heightened urgency across the market.
Consumer Behaviour and Savings
Despite cutbacks on fuel and dining, non-essential spending was slightly higher year-on-year at 0.5%. NatWest noted no significant drawdown in savings, with customers continuing to deposit money into current accounts. Paul Thwaite, NatWest's chief executive, described households and businesses as being "more proactive than ever" in adjusting their behaviour in response to the war and other economic concerns.
Business Activity and Investment
On the business front, some firms—particularly in manufacturing, which is more exposed to higher energy costs—have adjusted their plans or put large spending on hold. However, the services sector has shown greater resilience. Thwaite noted a "pause for thought around investment and hiring" but highlighted continued strong demand for large-scale projects in infrastructure, energy, and utilities. He added, "Despite increased uncertainty in recent weeks, we've seen strong customer activity and a good level of resilience through the first quarter."
