In April, UK households ramped up their spending, spurred by an unexpectedly warm spell and a lengthy Easter weekend, which seemed to ease global economic worries, according to new figures.
Card spending among consumers jumped by 4.5% compared to last April, marking the most significant rise since June 2023. Important categories like entertainment and takeout also saw a notable increase of 5.1%, the highest in nearly two years.
With April being the warmest on record and the extended Easter break, there were more shoppers out and about. Spending in physical stores climbed by 6.9% following a 1.9% dip in March from the previous year.
According to Barclays strategist Julian Rafag, economic sentiment remains “surprisingly positive,” despite some uncertainty surrounding the implications of US tariffs.
He added that the Bank of England’s latest decision to reduce interest rates could further propel this growth. Additionally, a trade agreement reached between the US and the UK might provide the clarity businesses need.
Just last week, the Bank agreed to lower interest rates to 4.25% by quarter points, and the economic conversation included a deal struck with US President Donald Trump.
Supporting this data, another report from the UK Retail Consortium (BRC), an industry group, revealed a 4.3% rise in retail sales during March and April. Food sales saw an 8.2% increase in April compared to the previous year, while non-food categories grew by 6.1%.
BRC CEO Helen Dickinson stated that the timing of Easter in April helped boost sales, and favorable weather played a role in encouraging consumer spending.
She noted, “Food sales were boosted as families gathered for Easter celebrations.”
Online sales of furniture also surged by 7% in April, with home appliances climbing 8%. Linda Ellett from KPMG attributed these trends to an uptick in first-time homeowners due to recent changes in stamp duty.
Starting from April 1, first-time buyers in the UK and Northern Ireland are now facing taxes on homes priced between £425,000 and £300,000 or more, with the tax reduction threshold for first-time buyers dropping from £625,000 to £500,000.
Moreover, the zero tax stamp duty threshold has also decreased from £250,000 to £125,000 across all homes in the UK and Northern Ireland.
The influx of first-time buyers looking to beat the stamp duty changes has made March one of the busiest months for large mortgage lenders, with Barclays observing a 50% rise in mortgage completions in the UK.
