UK Consumer Spending Rises in March Despite Global Economic Uncertainty
British shoppers have increased their spending despite mounting concerns about global economic challenges and the recent tariff hikes announced by former U.S. President Donald Trump. Data published by key market organisations highlights resilience in consumer behaviour amid uncertainty.
UK Consumer Spending Trends in March
According to the British Retail Consortium (BRC), sales at major retail chains rose by 1.1% year-on-year in March, maintaining February’s growth. However, this moderate increase was somewhat dampened by the timing of Easter, which occurred in April this year, compared to March in 2024.
Helen Dickinson, chief executive of the BRC, noted, “The early signs of strengthening consumer demand are encouraging, though they have not yet been robust enough to offset the challenges posed by inflation and geopolitical uncertainties”.
Meanwhile, figures from Barclays painted a different, more subdued picture. Spending grew by just 0.5% year-on-year in March, slowing from February’s 1% increase. Notably, this was weaker than the rate of inflation and largely reflected the timing shift of Easter.
How Weather and Choices Impacted Spending
Warm spring weather bolstered sales at garden centres and specialist food and drink stores. However, supermarkets witnessed a 2.6% decline in spending, indicating a shift in consumer choices and patterns.
Following Trump’s tariff hike, a Barclays survey revealed changing priorities among consumers. A striking 71% of respondents expressed intentions to purchase more “Made in Britain” products, seeking to limit exposure to rising prices of imported goods.
Two-thirds of respondents also feared increased costs for imported products, reflecting growing concerns over international trading relationships.
Business Confidence Sinks Amid Uncertainty
The climate of uncertainty has not only impacted consumers but also dampened business confidence. The Institute of Chartered Accountants in England and Wales reported a drop in its confidence index to -3 for the first quarter of 2025, compared to +0.2 in the previous quarter.
This shift reflects the challenges faced by businesses, including increased employers’ social security contributions introduced by Finance Minister Rachel Reeves. Employment growth was at its weakest level in nearly four years, highlighting the pressure faced by companies transitioning through economic policy changes.
Risk of Muted Spending Ahead
Jack Meaning, chief UK economist at Barclays, pointed out that consumer confidence was declining, posing a risk of muted spending in the months ahead. He projected spending to remain restrained until mid-2025, with growth expected to pick up in 2026 as expected interest rate reductions provide relief.
The Wider Impact of Trump’s Tariff Increase
One major concern driving these changes is Trump’s decision to increase tariffs on imported goods, which has contributed to anxiety about price rises. Businesses and consumers alike are grappling with the potential long-term impacts of these policies, particularly regarding international trade uncertainty and domestic fiscal challenges.
Higher costs of imported goods are likely to strain household budgets, but the push towards buying domestic products could provide a lifeline to small businesses across Britain. This dual effect underscores the challenges and opportunities presented by the tariff changes.
UK Consumer Spending Remains Resilient
Despite challenges, it is clear that British shoppers continue to adapt, demonstrating a sense of resilience during changing times. By turning to local alternatives, such as “Made in Britain” products, UK consumers are not only addressing immediate concerns like rising prices but are also supporting domestic businesses.
Source
Reuters – UK shoppers raised their spending in March in face of Trump’s tariff onslaught
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