Barclaycard spending data lays gathering economic storm bare

Consumer spending fell sharply in the month leading up to the lockdown and these figures don’t bode well for the economy in the months to come, says James Moore

Barclaycard data shows a surge in supermarket sales but an even better performance by smaller food retailers (EPA)

Barclaycard’s monthly consumer spending data – the latest release runs from the tail end of February to March 27 – has the feeling of a gathering storm about it.

The month or so under consideration covers the run-up to the tight lockdown the country is currently under. Even then the impact on spending patterns was immense. There has never been a month like this one. That being the case, goodness knows what April is going to look like.

Overall spending through bank’s credit and debit cards, which account for just under half of card-based consumer spending in the UK, was down by 6 per cent with some notably deep troughs such as travel, including public transport (40.5 per cent decline), and restaurants and bars (35.5 per cent lower). Purchases deemed “non essential” generally fell by more than 12 per cent.

On the flip side, supermarkets saw an uptick of 21 per cent, which shouldn’t surprise anyone. Smaller specialist food stores and off licences did even better (30.5 per cent increase).

Online did well by volume, but while the number of transactions increased by 5.5 per cent, total spending actually fell by 7.8 per cent, probably a function of the decline in discretionary purchases.

It’s when you get to the last week that things really start to come into focus. Barclaycard broke some of it out, including supermarket spending, up 49 per cent, digital and content subscriptions, up 18 per cent, and sales at specialist food shops, an eye popping 80 per cent higher.

One would expect the troughs to be correspondingly deep.

Confidence, meanwhile, evaporated, falling to its lowest level since Barclaycard started this survey six years ago, with just 25 per cent of UK adults surveyed feeling positive about the state of the economy – down 17 percentage points from February.

Workers’ confidence in their job security also slipped, by 6 percentage points to 43 per cent.

This doesn’t bode well for the economy in the months to come. I wrote last week about the outbreak of optimism in the City that led to the stock market’s partial revival. It was based on hopes of a fast, V-shaped economic recovery following the UK’s emergence from the lockdown.

The more data that comes out, the more questionable that assessment looks.

It is at least welcome that 68 per cent of the survey’s participants remained positive about their household finances, in line with last month. An explanation for that may be that over half the respondents said that they were saving money, through, for example, not going out.

But it remains the case that millions of Britons are only a missed pay cheque or two away from finding themselves in a very sticky financial situation. Unemployment, which will inevitably rise in the months to come, will exacerbate that.

Efforts must be made to address the plight of people thrown out of work. Chancellor Rishi Sunak has stated that the government won’t be able to protect everyone. Maybe so, but there are things it could do to help. One of them would be pressing forward with an Australian style no interest loan scheme to help low income groups in need of credit.

Are there any silver linings to be had at all from the data?

The decline in fuel sales should benefit the environment and the air we breathe on rare trips outside, so there’s that. The boost enjoyed by smaller food shops is also an unalloyed plus.

It was no doubt partly fuelled by savvy shoppers waking up to the fact that many of them were better stocked than the supermarkets were during the shortages fuelled by panic buying.

But there also seems to be a genuine willingness to support small businesses and to shop locally.

Maybe the various campaigns designed to encourage this have had an impact. Maybe it’s also partly down to an increasing distrust of larger businesses, even those, like the supermarkets, that have acquitted themselves reasonably well.

That isn’t true of some of peers. Their bad behaviour may be having an impact.