Fears for recovery as soaring living costs hit leisure spend
SOARING living costs are set to derail the economic recovery with consumers spending less on shopping, eating out and entertainment.
Retail, hospitality and theatre bosses fear sharp rises in energy bills, taxes and inflation in the coming months will make households reluctant to spend the £130billion estimated to have been saved during the pandemic.
And with the rising costs of running businesses mirroring the predicted domestic increases, thousands of shops, pubs and restaurants will struggle to survive.
Consumer confidence has fallen to its lowest level in 11 months
‘Everyone is going
to be hit by it’
amid worries over surging inflation and fuel bills.
The UK consumer confidence index, a measure of how people view their personal finances and wider economic prospects, fell four points to -19 this month, according to research company GFK.
This was the lowest reading since last February when the country was in a strict lockdown.
Meanwhile, research carried out by KPMG UK found a third of consumers intend to reduce their discretionary spending this year because of rising living costs.
And polling by CGA Research for the hospitality sector showed a fifth of consumers think they will eat out less this year due to concerns about rising costs. This is significant because consumer spending accounts for 60 per cent of our gross domestic product, making economic growth tough without it.
It comes after reports yesterday that energy bills will rise by nearly half to £1,900, under plans to be finalised by the industry regulator this week.
It is predicted the price cap will rise to £1,897 for average users, up from its current level of £1,277, an increase of 48 per cent.
Andrew Goodacre, CEO of the British Independent Retailers Association, believes this year will be tougher for the high street than 2021 when the nation was in lockdown for months. He said: “Even though shops were closed for part of last year, 2022 is different because you have the cost of living rises which dent consumer confidence and then you have the cost of running a business impacted in exactly the same way.”
Kate Nicholls, chief executive of UK Hospitality, said pubs, restaurants and nightclubs are also being hit with huge energy price hikes, seeing costs rise in every part of their supply chains. They also
expect consumers to spend less this year. And theatre producer David Shepherd – whose live shows this year include Remembering The Oscars with Aljaz Skorjanec and Janette Manrara – believes people will still want to be entertained but will have to weigh up the cost of a night out against rising living costs.
“Essentially that extra cost (for producers) will be a little bit higher because of higher fuel bills and everyone is going to be hit by it.”