Staycations and Brits socialising propel consumer spending above pre-Covid levels

Surging demand for staycation holidays amid ongoing travel restrictions, supported by strong appetite among Brits to socialise during the summer months, pushed consumer spending well-above pre-Covid levels last month.

Data from Barclaycard shows card spending was 15.4 per cent above the same month in 2019, before the onset of the Covid crisis.

The sharp rise in spending was driven by a greater proportion of Brits holidaying at home compared to previous years as a result of Covid travel restrictions persisting throughout the summer months.

Brits continued to rush to take advantage of their newfound freedoms after the lifting of nearly all Covid restrictions on so-called “Freedom Day”. Spending in pubs, bars and clubs jumped 43.4 per cent compared to the same month in 2019, while spending on entertainment was up 24.2 per cent over the same period.

Raheel Ahmed, head of consumer products, said: “Socialising, shopping, and staycations were top of the agenda for Brits in August, as families and friends made the most of the school holidays, giving a welcome boost to hospitality and leisure businesses.”

A large proportion of spending has diverted from goods – which remained largely available amid Covid lockdowns – to services as restrictions have eased. This should provide a boon to the UK economy, as 80 per cent of its output is sourced from the services industry.

Barclaycard’s data covers nearly half of the UK’s credit and debit card transactions.

The company’s research suggested spending could get a boost in the coming months from Brits returning to the office.

“Of those returning to the office after having worked from home during the pandemic, 34 per cent plan to spend more on takeaway breakfast or lunch, and 26 per cent intend to up their spending on socialising after work,” Barclaycard said.

However, downside inflationary expectations are likely to temper spending in the future.

37 per cent of Brits intend to make cut-backs now to ensure they can afford higher outgoings for Christmas. 

Official estimates from the Office for National Statistics shows CPI inflation is currently running at two per cent annually.

The Bank of England expects inflation to reach at least four per cent by the end of year, while data from IHS Markit shows cost pressures in the services, manufacturing and construction industries are building as a result of supply chain snarl ups.