What's going on?
Fresh credit card data out on Tuesday showed that British consumers upped their spending in August, shelling out for new clothes and staycations.
What does this mean?
Barclaycard – which generated just under 30% of banking group Barclays’ total revenue last year – provides a quarter of the UK’s credit cards. It’s therefore got a pretty good idea of who’s spending what and where; and the company’s combined transaction records and research indicate British consumer spending last month was 0.2% higher than the same time last year. Sure, that’s small – but as the first increase since pandemic-induced lockdowns began in March, it could foretell a recovering economy.
According to Barclaycard, particularly perky purchases included home-working equipment and pukka clobber. Refreshed wardrobes may have let Brits take full advantage of the UK’s discount scheme to get people back into restaurants, where spending also rose compared to last August. The rest of the hospitality industry wasn’t so fortunate, however: travel expenditure fell 61%.
Why should I care?
The bigger picture: No cash please, we’re British.
Reduced use of germ-carrying cash in response to coronavirus may have helped credit and debit card spending grow somewhat – but its star has been waning for a while. Analysts forecast that by 2028 just 9% of UK transactions will involve cash, even as banknote production continues to rise in both Britain and the US. Investors know which way the wind is blowing, however: payments firm Square’s stock has soared 280% since March, PayPal’s shares have almost doubled, and Ant Financial’s forthcoming stock listing might be the largest ever.
For markets: Sailing over a cardboard sea.
The surge of online shopping in recent months gaveth and tooketh away from UK logistics giant Royal Mail. It said on Tuesday that having more packages to deliver would boost its annual revenue – but that coronavirus disruptions and an ongoing struggle to adapt to life after letters meant it’d still make a loss this year.