New U.K. Card-Purchase Data Show 35% Drop in Consumer Spending
U.K. card purchases were 35% below pre-pandemic levels in the second week of January.
(Bloomberg) -- U.K. card purchases were 35% below pre-pandemic levels in the second week of January, according to data made public for the first time by the Office for National Statistics.
Spending on credit and debit cards was 4% higher than in February, the last month before the pandemic struck. The Bank of England released its figures from its payment systems to the statistics office to provide more up-to-date information on how the pandemic is affecting the economy.
The result gives a taste of the scale of the slump in consumer spending after the government tightened lockdowns to control the coronavirus, raising the risk of a double-dip contraction in the first quarter after the deepest recession in centuries. The ONS will publish retail sales figures on Friday for the month of December, when shops were open for two weeks during a brief loosening of restrictions.
Retail footfall was a third of the year-earlier period last week. The proportion of the workforce on furlough leave in which the government subsidizes their wages rose 2 points to 16% in the period to Jan. 10.
Some 3% of firms had permanently shut down between Dec. 28 and Jan 10. Of those still trading, more than a quarter said turnover had fallen by at least a fifth compared to normal levels for this time of year.
A separate central bank survey revealed signs of mounting financial distress, with lenders expecting higher default rates on both secured and unsecured loans to households in the first quarter.
The BOE’s quarterly Credit Conditions Survey painted a similar picture for the corporate sector. Small businesses found it more difficult to obtain credit at the end of 2020 and investment plans were subdued.
Still, BOE Governor Andrew Bailey said Wednesday that the economy is adapting to the restrictions and that lockdowns don’t seem to have as big an impact as they did earlier.
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