Travel spend falls for first time since Covid amid Middle East conflict

Consumer card spend on travel fell last month for the first time since the pandemic amid concerns over rising costs and travel disruption due to the Middle East conflict.

 

Spending on travel fell by 3.3% over February as trips abroad were swapped for domestic breaks - the first drop since March 2021 before Covid-19 travel restrictions lifted, latest Barclays data revealed.

 

Within the sector, travel agents saw spend fall by 4.6%, airlines by 4.1% and public transport 2.9%.

 

This came as the majority of people cited concerns about rising travel costs (70%) and potential disruption (57%), while 11% reported cancelling intended travel plans as a result of tensions in the Middle East.   

 

Spend on hotels, resorts and accommodation increased 1.2%, potentially due to a preference for UK-based staycations and a rise in domestic bookings during the Easter break, Barclays indicated.

 

Travel agents saw transaction growth of 9.2% despite the 4.6% fall in spending in the month. Transactions with airlines fell by 3.6%.   

 

One in seven (14%) say they are delaying major purchases or financial decisions, in response to uncertainty around the Middle East conflict, while the same proportion are building up a savings buffer in case costs rise.

 

Meanwhile, 74% anticipate ongoing tensions will continue to impact the cost of living throughout the rest of year, according to research by the bank.

 

However, the majority of UK adults remain confident in their household finances (67%) and ability to live within their means (71%).

 

Barclays said: “While confidence in the UK and global economies have been impacted by recent events (down from 25% and 24% in February to 21% in March), overall consumer resilience remains strong.

 

“In response to uncertainty around the Middle East conflict, one in seven (14%) say they are delaying major purchases or financial decisions, while the same proportion are building up a savings buffer in case costs rise.

 

“Meanwhile, 74% anticipate ongoing tensions will continue to impact the cost of living throughout the rest of year.”

 

Barclays UK chief economist Jack Meaning said: “Shoppers delaying major purchases and building up a savings buffer in response to the shock from the Middle East reinforces our view that activity will be muted in the coming months.

 

“With an interest rate decision due in less than three weeks’ time, the Bank of England will need to consider how to balance this softening economy with the inflation already taking effect.

 

“Our modelling suggests this balance is best struck by holding rates, containing the worst of inflation without unduly squeezing consumers.”

 

Karen Johnson, head of retail at the bank, added: “March’s figures may highlight some differences between how consumers feel and how they actually spend.

 

“Cost-of-living concerns and economic uncertainty continue to weigh on confidence, prompting caution and a desire to cut back, but spending remains resilient across several categories, namely clothing, entertainment and digital content and subscriptions.

 

“Many are once again carefully managing their money while finding ways to prioritise the things that matter the most to them - an ongoing balancing act.”