UK consumers have cut back on travel spending for the first time in five years, as concerns over the rising cost of living and the ongoing Iran war weigh on household finances. According to data from Barclays, overall consumer card spending increased by just 0.9% year on year in March, down from 1% in February.
Travel spending fell by 3.3% last month, the first decline recorded by the lender since March 2021. Britons are postponing trips abroad or opting for domestic holidays instead. Spending at travel agents dropped 4.6% annually, airlines saw a 4.1% decline, and public transport spending fell 2.9%. However, spending on hotels and other accommodation rose 1.2%, driven by a preference for UK-based outings over the Easter break.
The Middle East conflict, which began in late February with US-Israeli attacks on Iran, has prompted one in seven adults to delay major purchases or build up savings to prepare for rising energy costs. Although the UK energy regulator reduced gas and electricity bills by 7% from 1 April, bills are forecast to jump by 18% in July due to higher wholesale costs.
Spending on essentials such as food and petrol rose by 0.5% last month, led by a 1.6% increase in fuel spending—the first rise since February 2023. Surging oil prices have pushed up prices at the pumps. Non-essential spending growth slowed to 1.1%, with consumers still spending on clothing (up 3.6%) and entertainment (+3.5%). Cinema spending rose 5.5%, boosted by hits like Project Hail Mary and Hoppers.
Jack Meaning, chief UK economist at Barclays, said: “Shoppers delaying major purchases and building up a savings buffer in response to the shock from the Middle East reinforces our view that activity will be muted in the coming months.” He added that the Bank of England should hold interest rates to balance a softening economy with inflation.
Most adults remain confident in their household finances (67%) and ability to live within their means (71%), but pessimism about the general economic outlook has grown. Just over one in five (21%) are confident about the UK and global economies, down from 25% and 24% in February. A separate report from the British Retail Consortium showed UK retail sales increased by 3.6% year on year in March, driven by a 6.8% jump in food sales.
