Consumer spending on travel grew by 8.4% in the last quarter – the highest level since the second quarter of 2013.
Spending on hotels rose by 6.9% and on airlines by 4.1%, new research reveals.
Growth looks set to continue as 43% of UK consumers say that they are more likely to holiday in Europe this year to take advantage of the weaker value of the euro, according to the Barclaycard Spend Report for the second quarter of the year.
However, there is some evidence that the ongoing question mark around Greece’s future in the eurozone is having an impact on travel plans. The study was conducted prior to yesterday’s EU deal on debt restructuring.
Confidence in the European economy fell by three percentage points to 18% in the past week, according to research carried out after the result of the Greek referendum.
As a result of this economic uncertainty, and some doubts around the security of holidaying abroad, a quarter of holidaymakers are opting for a UK domestic break this summer.
Those who still plan to head overseas favour Spain (23%), the US (12%) and Italy (9%) as the leading choices.
Wage growth, higher employment and low inflation combined to boost consumer confidence and drive spending on leisure and non-essential items.
Barclaycard chief operating officer, Chris Wood, said: “A decisive General Election, low inflation, an uptick in earnings and improving job security all contributed to a sense of financial wellbeing among consumers in the second quarter, which in turn led to record growth in both overall and discretionary spending.
“With the UK’s economic prospects continuing to improve, and as consumers look forward to the summer ahead, spending on entertainment and leisure, large household purchases and overseas holidays was up strongly.
“With the strength of sterling against the euro making everything from short city breaks to two week beach getaways more cost-effective, we expect this trend to continue into the third quarter.”
He added: “Rather than a fleeting trend, consumer spending has been growing steadily since last summer as more and more people started to believe that improvements in the macro environment were here to stay.
“With the UK’s economic recovery appearing now to be firmly established, households are likely increasingly to spend more on themselves and their families.”
The encouraging economic figures are being seen across the country.
Overall consumer spending rose in every region in the UK, with the biggest rises seen in London (5.4%), the north-west (4.9%) and Scotland (4.7%).
Even at the lower end of the scale, spending in the northeast, east of England and southwest still increased by 3.9%, 3.8% and 3.7% respectively as consumers across the UK felt the effects of rising wages and falling inflation.
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