Bumper spending buoys retailers amidst concerns over consumer cutbacks and VAT hike
Figures announced by Barclaycard today showed that the post-recession recovery continues apace for retailers, in spite of warnings about “popular anxiety” over spending.
The amount spent on credit and debit cards, in-store and online, was 9.9% higher in June compared to the same month last year, according to data collected by Barclaycard. This contrasts with research conducted by The Daily Telegraph and TNS, which found that 73 per cent of UK consumers plan to cut their spending due to fears over the financial climate, high-levels of unemployment and the forthcoming VAT hike.
Spending on cards has enjoyed a run of four months of year-on-year increases of over 8%, giving some cause for optimism to the retail market. Looking at the month-to-month picture, spending fell in June by 5.5%, after the traditionally high-spending May with its two bank holiday weekends.
The Barclaycard Retail Card Spending Index is based on spending on all credit and debit cards, across 44 retail sectors at the 87,000 businesses in the UK that use Barclaycard Global Payment Acceptance. This represents an overall market share of over 30%.
Stuart Neal, Head of UK Payment Acceptance said: "In spite of fears over the financial climate, we are still seeing a healthy recovery on spending year-on-year following the UK’s exit from recession. Our data shows that spending remains strong and should help to dispel some of the recent gloomy predictions.”
Mr Neal continued: “The drastic cuts promised by the new Chancellor may well have shaken consumer confidence and retailers will be alarmed that so many people intend to cut back over the next few months. However, consumer cutbacks could well manifest themselves in a more prudent approach to holidays and people taking “staycations” in July and August. This could be good news for many towns and tourist spots across Britain, though potentially bad news for the travel industry.”
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