Shrinking GDP, plummeting consumer spending – and the worst is yet to come: new data from various sources indicate the scale of the impact that COVID-19 is starting to have on the UK economy and the fears that consumers have for the future.
The UK economy shrank 2% in the first quarter, according to new figures released yesterday by the Office for National Statistics, while private consumption (defined as household final consumption expenditure and non-profit institutions serving households) was down 1.08%.
But these figures only cover a week of lockdown at the end of March. Separate data from Barclaycard shows consumer spending down 36.5% in April compared to 6% in March. Travel spending almost halved, the Financial Times reported, while sales in bars, pubs and clubs were down 97%.
A new report from WARC Data, based on weekly consumer surveys carried out by Savanta, shows that electronics, home products, apparel and cosmetics are also among the worst hit verticals. Over one-third of consumers have cut their spending in these categories by at least half and that caution is even more evident among middle-aged consumers, almost half of whom have cut spending by this proportion.
Food and drink fares much better: over one-third of consumers are spending more, but at least half of those older than 55 report no change in their groceries spend.
The report also finds that over a third (37.6%) of consumers have less money to spend because of COVID-19. This rises to 42.8% when consumers think about their future disposable income, suggesting the worst is to come for many.
Women are more likely to have less money to spend right now, with 40.2% reporting a decline. Audiences that are older and have a higher income are most likely to report no change to their disposable income.
Interestingly, over one-tenth (12.5%) say COVID-19 has prompted them to make ‘big ticket’ purchases, a proportion that increases among younger and higher income audiences.
But a third have delayed purchases, and younger consumers in particular are likely to be refocusing their spending to certain key items. Additional research also suggests holidays, clothes and luxury items are some of the products most likely to be delayed by consumers.
Click here to learn more about WARC Data's latest report COVID-19: Consumer spending and media habits in the UK.
Sourced from ONS, Financial Times, WARC Data