Consumer spending on travel has declined in the UK for the first time in five years, as households grapple with rising living costs and the ongoing Middle East conflict, according to data from Barclays. Travel expenditure dropped by 3.3% year on year in March, the first fall recorded since March 2021, with many postponing overseas trips or opting for domestic holidays.
Overall consumer card spending edged up by 0.9% annually in March, slowing from February’s 1% growth. Spending on travel-related services fell sharply: travel agents saw a 4.6% decline, airlines 4.1%, and public transport 2.9%. However, spending on hotels and accommodation rose by 1.2%, boosted by domestic bookings over the Easter break.
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.” The conflict has prompted one in seven adults to postpone big purchases or save for rising energy costs, despite a 7% cut to the energy price cap from April. Energy bills are forecast to jump by 18% in July.
Spending on essential items rose by 0.5% in March, led by a 1.6% increase in fuel spending – the first rise since February 2023 – as surging oil prices pushed up prices at the pumps. Discretionary spending grew by 1.1%, with clothing up 3.6%, entertainment up 3.5%, and cinema spending rising 5.5% thanks to blockbusters like Project Hail Mary and Hoppers.
A separate report from the British Retail Consortium (BRC) showed UK retail sales increased by 3.6% year on year in March, driven by a 6.8% jump in food sales due to an early Easter. Helen Dickinson, the BRC’s chief executive, noted that “non-food performance was more uneven” and that “disruption to international travel caused by the Middle East conflict also hit sales of travel-related goods.”
Despite a majority of adults remaining confident in their household finances (67%) and ability to live within their means (71%), confidence in the wider economy has slipped. Just 21% are confident about the UK and global economies, down from 25% and 24% respectively in February.
