UK Card Spending Drops At Fastest Rate In Nearly 5 Years Following Budget

If you’ve found yourself holding back when it comes to shopping this Christmas, then new research reveals you’re not alone.

New data from Barclays shows that card spending in the UK fell 1.1% year on year, the biggest drop since early 2021 when the country was emerging from lockdown.

And whilst Black Friday did see a big bump (62.5%), it wasn’t enough to lift November up to its usual levels.

So, what’s behind the UK’s spending slowdown, and could the budget have anything to do with it?

Consumers Have Been Holding Back This Year

It’s no secret that inflation in the UK is up, whilst higher taxes and wage stagnation continue to reduce people’s spending power. And when it comes to the stats, it looks like people are being much more cautious with their wallets.

Food spending was up just 3% according to the British Retail Consortium, below the 3.6% inflation rate. Non food items? Up just 0.1%, compared with a 12-month average of 1.6%.

Even pubs, a reliable pre-Christmas hotspot took a hit. Pub spending was down 1.5% according to Barclays, providing a real hit to an already stretched sector.

What’s Driving The Cut Back?

November is usually a busy time of year for consumers, so what’s causing the slowdown? Well, November created a sort of ‘perfect storm’ so to speak, which caused a lot of uncertainty amongst shoppers.

Firstly, the cost of living was still high, even though inflation has shown signs of slowing. On top of this, according to the Confederation of British Industry, the UK unemployment rate for the three months to September 2025 rose to 5.0%, meaning many people simply didn’t have the money to spend.

Others were waiting for the Autumn Budget to see what tax changes where coming into place – a move that could affect their spending power in the following financial year. And the worries weren’t misplaced, as Chancellor Rachel Reeves froze income tax thresholds till 2029, dragging more people into higher tax brackets.

And so, we find the perfect storm; high cost of living, inflation still on the rise, wage stagnation and higher taxes – no wonder then that UK consumers spent less.

Is This A Sign Of A Weak Economy? Or Just A Temporary Glitch?

Whilst many retailers will have undoubtedly hoped Black Friday would have come with a boost, this slump in spending is a sign that consumers are very sensitive to wider economic changes.

For many, the bigger question is: Is the reduction in spending temporary? Or is it a more serious sign of a weak economy? And ultimately, if Christmas, which is supposed to be the busiest time of year for retailers is seeing a drop in activity, what could that mean for the rest of the coming year?

Could A Drop In Interest Rates Help?

There has been a lot of speculation that the Bank of England may soon be dropping interest rates to help encourage more spending.

With current rates still sitting at 4%, many across the UK are still battling high borrowing costs, big mortgage payments and an incentive to save. For many, a drop in the rates would significantly help, but the Bank of England has to make sure it doesn’t send the country into an inflation spiral again. If it does, the cost of living crisis will only get worse.

What This Means For Christmas and Beyond

The spending data from Barclays certainly raises alarms about the UK economy. With people across the country already stretched by inflation, living costs and taxes, November was another push closer to economic uncertainty.

With the 2025 Autumn Budget announcing more money for public services but a higher burden on working people, the next few months will be important. Could an interest rate drop stabilise things? Or are we just a little too far gone? We wait and see.