UK consumers have cut back on travel spending for the first time in five years, as rising living costs and the ongoing Middle East conflict weigh on household finances. According to Barclays data, overall consumer card spending rose just 0.9% year-on-year in March, down from 1% in February, with travel spending falling 3.3% – the first decline since March 2021.
The drop in travel spending was driven by a 4.6% annual fall in spending at travel agents, a 4.1% decline at airlines, and a 2.9% reduction in public transport. However, spending on hotels and accommodation rose 1.2%, reflecting a shift towards domestic holidays and increased bookings 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 in anticipation of higher energy costs. While the UK energy regulator reduced the price cap by 7% on 1 April, bills are forecast to jump 18% in July due to rising wholesale costs.
Essential spending rose 0.5% in March, led by a 1.6% increase in fuel costs – the first rise since February 2023 – as surging oil prices pushed up pump prices. Non-essential spending growth slowed to 1.1%, with consumers still prioritising clothing (up 3.6%) and entertainment (up 3.5%), boosted by cinema successes such as 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.
Despite the caution, 67% of adults remain confident in their household finances, though confidence in the UK and global economies fell to 21% in March, down from 25% and 24% respectively in February. A separate report from the British Retail Consortium showed UK retail sales rose 3.6% year-on-year in March, driven by a 6.8% jump in food sales, while non-food sales were more uneven.
