UK consumer spending drops at fastest pace since 2021

UK households sharply pulled back on spending last month, posting the steepest annual decline in almost five years, as uncertainty around the government’s budget and rising economic concerns prompted consumers to delay Christmas purchases.

Barclays reported that card spending fell 1.1% year on year in November, the biggest decline since February 2021, underscoring the fragility of consumer sentiment heading into the key festive period.

While Black Friday delivered retailers their busiest trading day of the year, the overall boost was significantly weaker than usual.

Retailers see muted lift from Black Friday promotions

Barclays said transaction volumes on Black Friday were 62.5% higher than the average day of 2025, yet the broader spending pattern remained subdued.

The British Retail Consortium (BRC) and consultancy KPMG noted that shoppers appeared more hesitant this year, citing widespread “jitters” ahead of the 26 November budget.

Black Friday typically signals the start of the Christmas shopping season and is relied upon by retailers to gauge consumer appetite.

This year, however, the lift was modest.

The BRC said overall sales in November were only slightly ahead of last year, supported mainly by higher food spending.

Food sales rose 3%, but the increase was below the 3.6% inflation rate, meaning households continued to feel pressure on grocery budgets.

Non-food sales saw a marginal rise of 0.1% year on year, well below the 12-month average growth rate of 1.6%.

Fashion retailers struggled as mild weather early in the month dampened demand for winter clothing, though homeware and upholstery performed more strongly as households prepared for holiday gatherings.

Political tensions and economic concerns deepen the slowdown

Opposition parties blamed Chancellor Rachel Reeves for prolonging consumer anxiety by maintaining months of speculation ahead of the budget.

Retailers and pub operators have also urged her to rethink planned changes to business rates, warning that they could disproportionately impact mid-sized chains.

Barclays data suggested weakening spending was not limited to retail.

Pub expenditure fell 1.5% in November, with younger adults increasingly opting for alcohol-free drinks and activities.

The survey also noted that while confidence in household finances had improved slightly, overall economic confidence remained subdued.

Economists said the slowdown in growth, rising unemployment and deepening challenges on the high street are expected to prompt the Bank of England to cut interest rates from 4% to 3.75% later this month.

There were, however, pockets of resilience.

Travel agents recorded a 10.7% surge in spending during Black Friday promotions, while streaming subscriptions increased 3.5%, supported by the popularity of hit shows such as Stranger Things and Pluribus.

Retail leaders urge action to revive confidence

Jack Meaning, chief UK economist at Barclays, said 2025 had been marked by economic deceleration, adding that the durability of the slowdown will depend on whether falling inflation and lower interest rates can revive consumer appetite.

Helen Dickinson, chief executive of the BRC, echoed concerns, warning that November’s subdued performance highlighted the impact of pre-budget nerves.

She urged policymakers to prioritise measures that support confidence and reduce operating costs for retailers.

“As we look ahead to 2026, it is vital that public policy creates the conditions for renewed consumer spending and sustainable recovery,” she said.

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