Barclays’ latest Consumer Spend report shows overall card spending dropped 1.7% year on year, the sharpest fall since February 2021. Both essential and non-essential spending declined, with non-essential down 1.3%, reflecting persistent caution in the run up to Christmas.
Despite this, the pub sector recorded a 1.9% increase in spending in December - transaction volumes peaked on 13 and 20 December, as festive socialising delivered the strongest Saturday spikes of the month.
Cost pressures
However, Barclays noted that cost pressures continue to shape behaviour, with 40% of consumers limiting social plans due to rising prices and 39% saying cost prevents them going out as often as they would like. Half of adults expect to have a quieter January, rising to 56% among 18- to 34-year-olds, amid the popularity of Dry January and tighter budgets.
Consumer confidence showed early signs of improvement, with confidence in household finances rising to 66%, up from 64% in November. Confidence in job security and non-essential spending also increased three points month on month, though sentiment remains below the average levels seen earlier in 2025.
Inflation concerns remain elevated. 86% of shoppers are worried about food prices and 64% plan to cut grocery spending this year, turning to loyalty schemes, budget retailers and own label products to manage costs. More than half of consumers expect to reduce discretionary spend in 2026, particularly on eating out.
New Year’s resolutions
Wellbeing is set to influence purchasing patterns in the year ahead. 55% of consumers say they will focus more on their health in 2026, while a third of those setting New Year goals are prioritising financial discipline, including saving more and sticking to budgets.
Karen Johnson, head of retail at Barclays, said consumers will “pay increasing attention to value for money in 2026”, with wellness and fitness categories likely to benefit from more “considered and conscientious spending.”
Chief UK economist at Barclays, Jack Meaning, added: “These numbers suggest 2025 ended with a whimper, following the slowdown we saw define last year. However, we expect inflation to ease significantly in the first half of 2026, which, alongside a further easing of interest rates, should provide consumers with respite, unlocking real spending power.”
“If the tentative signs of improving confidence can last beyond the New Year, then UK activity could strengthen as the year goes on.”
