UK households cut back spending at fastest rate in 16 months, Barclays says
Households cut back on their spending in April at the fastest pace in 16 months, as the conflict in the Middle East provoked fears of another cost of living crisis, a report from one of the UK’s biggest banks has suggested.Barclays, which processes nearly 40% of the UK’s credit and debit card transactions, said its data showed there had been a 0.1% fall in card spending last month compared with a year earlier.This was the first year-on-year fall since November 2024.The bank, which analyses the hundreds of millions of transactions made on its debit and credit cards each month, said non-essential spending fell by 0.
3% as consumers cut back on discretionary spending.Travel spending fell by 5.7% in April, after a 3.3% decrease in March, with airlines down 8.3%, while spending on eating and drinking flatlined in April.
However, perhaps in a sign that households were choosing to stay in and save money, spending on digital content and subscriptions rose 9.2% in April compared with a year earlier, which Barclays said was “helped by the popularity of TV series Euphoria, The Testaments and The Pitt”.Essential spending rose by 0.3% as spending on fuel increased 10.4% – the greatest rise since December 2022 when Russia’s invasion of Ukraine caused a spike in petrol and diesel prices.
The figures follow a slew of surveys and reports that suggest consumers and businesses are preparing for harder times ahead as the Iran war rattles energy markets and disrupts global supply chains.The Bank of England warned last week that higher inflation in the UK was “unavoidable” as a result of the Iran war, with typical energy bills likely to rise 16% to £1,900 by the summer and food prices to rise 7% by the end of the year.A survey conducted by Barclays alongside its spending data found that 72% of consumers expect tensions in the Middle East to impact their cost of living throughout 2026, with energy bills, inflation and food prices the greatest causes for concern.Confidence in non-essential spending dropped to 49%, its lowest level since March 2023, but 52% say they feel able to manage their day-to-day finances without significant stress.Jack Meaning, the chief UK economist at Barclays, said: “The key unknown for the UK outlook is how long this uncertainty will last.
If confidence remains subdued for too long, and consumers continue to limit their spending as a result, it will be a challenge for households and businesses to weather the storm,”A separate report from the British Retail Consortium and the consultancy KPMG said retail sales fell 3% in April, compared with growth of 7% in April 2025, with food sales falling 2,5% yearon year, against a growth of 8,2% in April 2025,However, this data was skewed by the timing of Easter, with the run-up to the holiday falling in the March figures this year but in April in 2025.
Helen Dickinson, the chief executive of the British Retail Consortium, said: “April’s sales fall was largely driven by the Easter shift, with food hit hardest.But weak consumer confidence also played a role as fears about the Middle East conflict driving up living costs led shoppers to rein in … With the World Cup coming, retailers hope it will provide a lift, and early signs show demand for TVs and sound systems picking up.”
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