Sporting events and the summer holidays have brought a significant economic boost to the UK, as consumer spending saw a notable increase in July. This surge in spending can be attributed to the lifting of COVID-19 restrictions, according to surveys conducted by payment card provider Barclaycard.
Compared to July 2019, consumer spending in July 2021 witnessed an 11.6% rise. This is an encouraging sign as it signifies the first growth in the entertainment sector since the initial COVID-19 lockdown in March 2020. The entertainment industry had been severely impacted by the pandemic, making this growth particularly meaningful.
The surge in spending was particularly evident in supermarkets and other food and drink retailers. People gathered together to watch major sporting events such as the Euro 2020 men’s soccer tournament, the Wimbledon tennis championships, and the Olympic Games. These events brought people together and created a sense of celebration, resulting in increased spending in the entertainment sector.
“July’s major sports fixtures… kept the nation in good spirits, providing more reasons to celebrate together, and giving the entertainment industry its long-awaited boost back into growth,” said Raheel Ahmed, head of consumer products at Barclaycard.
The findings of Barclaycard were further supported by a survey conducted by the British Retail Consortium (BRC). It revealed that spending in shops increased by 6.4% in July compared to the same period last year. Although the growth rate has started to slow down, online sales remained strong, indicating that some customers were deterred from visiting physical stores due to the unseasonably wet weather experienced last month.
However, despite the overall positive growth, Barclaycard also reported a slowdown in spending at face-to-face retailers. This may be attributed to the gradual end of the post-lockdown “honeymoon” period.
Looking ahead, there are concerns about the impact of rising inflation on consumer spending behavior. The Bank of England has recently stated that inflation is expected to rise above its 2% target in the coming months, reaching 4.0% in late 2021 and early 2022. If this prediction holds true, it would be the highest inflation rate in a decade.
As the UK continues to emerge from the pandemic, it will be interesting to observe how consumer spending evolves in the face of inflationary pressures. The sporty summer and the lifting of lockdown restrictions have undoubtedly provided a much-needed boost to the economy, but the long-term effects remain to be seen.
Useful Links:
– British Retail Consortium (BRC) August 2021 Footfall and Vacancies Monitor
– Bank of England Quarterly Bulletin – ‘Where are you spending your money in us pandemic’
