Financial protection perception drives travel agency sales rebound

Spending with travel agents outpaced most other sectors last month as consumers cut back prior to the Budget.

 

The spend with travel agents was up by 7.2% over the same month last year, with transaction growth of 28.5%.

 

The rebound in travel agency spend from just 0.8% in September was in response to consumers’ demand for financial protection when booking holidays, according to latest consumer card spending data compiled by Barclays.

 

The percentage growth was only surpassed by specialist retailers, pharmacy, health and beauty and garden centres.

 

This came as growth in overfall discretionary spending was flat year on year in October.  

 

“A combination of pre-Budget anticipation, upcoming Black Friday deals and milder weather led consumers to delay purchases or cut back across a number of categories,” the bank said.

 

Overall travel sector card spend was up by 2% with transaction levels down by 5.7%.

 

Within this, airlines saw a 3.3% fall in spending as transactions levels declined by 7.5%.

 

Two fifths of consumers (41%) are adjusting their finances in anticipation of the Budget on November 26, according to Barclays data.

 

Of this group, 37% are making cutbacks to reduce spending, 33% are putting off discretionary purchases and 30% are building up a savings buffer. 

 

One third (33%) overall say they are holding off on making major financial decisions until after the Budget, rising to 44% for Gen Z.

 

All seven measures of consumer and economic confidence tracked by Barclays in October declined for the first time since August 2022, when the Bank of England announced its biggest base rate increase in 27 years.

 

Confidence in the strength of the UK (22%), European (28%) and global (23%) economy all declined month-on-month, while confidence in household finances fell most significantly, from 74% to 63%. 

 

The proportion of those confident in their job security and ability to spend on non-essential items both reached their lowest points since 2023, at 44% and 51% respectively  - down from 47% and 60% in September.

 

Barclays head of retail Karen Johnson said: “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.”

 

Barclays Private Bank and Wealth Management chief market strategist Julien Lafargue said: “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.”