Overseas holidays 'outshining' staycations as consumer confidence 'picks up' – Barclays

There was a less positive picture for hotels, resorts and accommodation, which recorded a 0.7% year-on-year fall in spending last month – the first monthly decline in this segment since May 2023.

Barclays noted that overseas holidays were “outshining staycations”, with 32% of consumers now prioritising holidays abroad over domestic breaks as they seek some sunshine outside the UK.

Travel’s continued growth was well ahead of overall figures for all non-essential spending, which rose by just 1.5% year-on-year. Barclays added that consumers were seeking to cut back in other areas such as eating out and takeaway meals.

The sector was the strongest of all the discretionary categories, apart from digital content and subscriptions, which recorded a 10.6% uptick in spending compared with the same period last year.

Barclays attributed this to the release of Netflix shows such as Ripley and Baby Reindeer, as well as a crackdown on password sharing by streaming services.

’Consumer confidence picking up’

Among the worst performing non-essential sectors were restaurants where spending slumped by 13.1% year-on-year in April.

Barclays added that overall consumer confidence was improving, despite a slight slowing in the growth of card spending in April, compared with February and March. Consumers’ confidence in being able to manage their household finances increased to 71%, which was the highest level since November 2021.

Jack Meaning, chief UK economist at Barclays, said: “With inflation expected to have dropped back to 2% in April, and with many anticipating a boost from the National Living Wage increase, it is encouraging to see consumer confidence picking up.

“Given the long squeeze consumers have faced, it may take time for this to translate into stronger discretionary expenditure, but easing interest rates in the second half of this year should spur consumers’ confidence and spending.”