Takeaway food to electronics: UK consumer spending jumped in July

Pubs and restaurants reopened in July after coronavirus closures, but overall spending remains below 2019 levels.

UK retail spending [Bloomberg]
Reopening businesses, as well as warm weather, boosted consumer spending last month, but the outlook for the British economy is seen dimming over the rest of 2020 [Jason Alden/Bloomberg]

British consumers spent the most last month since the country went into a coronavirus lockdown in March, as pubs, restaurants, barbers and beauty salons reopened, according to industry figures published on Tuesday.

Data from Barclaycard and the British Retail Consortium showed spending was close to getting back to normal levels though not all sectors were benefitting.

Barclaycard said consumer spending was 2.6 percent lower than in July 2019, the smallest shortfall since the lockdown began.

“However, a sense of cautiousness still prevails,” Barclaycard director Esme Harwood said.

Official figures due on Wednesday are expected to show the United Kingdom suffered the biggest economic hit from the coronavirus of any major economy between April and June with output expected to be down by about 20 percent.

While unemployment has barely risen so far, due largely to a government job protection scheme, the Bank of England expects the jobless rate to almost double to 7.5 percent by the end of 2020.

UK consumer spending chart [Bloomberg]

“With the furlough scheme unwinding and wider economic uncertainty set for the autumn, consumer anxiety will likely rise along with it,” wrote Paul Martin, the UK head of retail for consultancy firm KPMG. “This will place more scrutiny on disposable income and make life even tougher for retailers.”

Eat Out to Help Out

Reopening businesses, as well as warm weather, boosted consumer spending in July. But sales at pubs and restaurants, which reopened for on-premises consumption on July 4, remained well below year-ago levels.

By contrast, sales of takeaways and fast food were 20 percent higher than last year as people preferred to eat at home – something finance minister Rishi Sunak is trying to change with government subsidies for dining in restaurants in August under the so-called “Eat Out to Help Out” scheme, 

Spending on groceries, furniture and electronics was also up strongly, while travel spending remained weak.

Figures from the British Retail Consortium, which only cover shopping, painted a similar picture for July.

Total retail spending across the BRC’s members, mostly large chains, was 3.2 percent higher than a year earlier, close to June’s 3.4 percent rise, the biggest increase since May 2018.

“The strongest performance came from food, furniture and homeware, as consumers increasingly invest in their time at home. However many shops, particularly in fashion, jewellery and beauty, are still struggling to survive,” BRC chief executive Helen Dickinson said.

Source: News Agencies