UK consumer spending slides in December as pandemic flares: Barclaycard By Reuters

© Reuters. Customers look at a station for refilling shower gel at a Body Shop store on Bond Street in London

By Andy Bruce

LONDON (Reuters) – 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% 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% and fell by 65% 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 (LON:).

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

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

“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.

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