British consumers cut back on spending ahead of the budget

October data from Barclays Consumer Spend report reveals that British consumers are cutting back ahead of the autumn budget, as essential spending drops for the sixth consecutive month and confidence in both personal finances and the wider economy continues to soften.

Barclays reveals that all seven measures of consumer and economic confidence tracked by the bank fell for the first time since August 2022, and that two in five consumers have adjusted their finances ahead of the budget, with one in three holding off on major decisions.

Overall consumer card spending fell 0.8 percent year-on-year in October, a slight drop from September’s -0.7 percent, and it showed spending is “considerably lower” than the latest CPIH inflation rate of 4.1 percent.

Essential spending declined -2.5 percent, while discretionary spending was flat at 0.1 percent, which Barclays adds is a result of pre-budget anticipation, upcoming Black Friday deals and milder weather, which has led consumers to delay purchases or cut back across a number of categories.

In anticipation of the budget, two-fifths of consumers (41 percent) said they were adjusting their finances. Of this group, 37 percent are making cutbacks to reduce spending, 33 percent are putting off discretionary purchases, and 30 percent are building up a savings buffer. One third (33 percent) overall say they’re holding off on making major financial decisions until after the budget, rising to 44 percent for Gen Z.

Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management, said in a statement: “Consumers and businesses alike appear to have adopted a ‘wait and see’ approach ahead of the Autumn Budget. While this is generating some short-term headwinds, it could position the UK economy for a rebound once the uncertainty lifts, potentially setting the stage for a strong festive season.”

When it comes to retail spend, the report reveals the steepest fall (-0.5 percent) since November 2024, with clothing (0.1 percent) flat, department stores (-7.8 percent) and discount stores (-7.6 percent) both in decline.

This is attributed to the mild autumn weather, which led to consumers delaying seasonal purchases, as well as shoppers looking to save money to spend during the Black Friday/Christmas sales period. New clothes and accessories emerged as the top non-essential cutback in October, chosen by 53 percent of those who say they’re reducing their discretionary spending (48 percent).

Despite the overall slowdown, the healthy and beauty category maintained strong growth, up 7.6 percent. This comes as 44 percent of consumers say they’re more focused on wellbeing this year, rising to 55 percent among Gen Z.

Karen Johnson, head of retail at Barclays, added: “Looking ahead to the Autumn Budget, consumers are taking a considered approach to spending. While confidence declined in October, we’re seeing resilience within categories linked to health and wellbeing, suggesting people are still willing to invest in the areas that matter most to them.

“With Black Friday and Christmas on the horizon, we expect spending patterns to shift again as shoppers seek out value and seasonal offers.”