The furlough scheme is being wound down ahead of its end in October. The bank’s consumer confidence indicator has also pulled back to its lowest level since mid-June, driven by unemployment fears.
Robert Wood, economist at Bank of America, said “caution abounds over medium-term spending plans” and consumers that saved during lockdown are now more hesitant about purchases.
Fabrice Montagne, chief UK economist at Barclays, also warned of rising consumer concerns, adding: “The fears of unemployment when policy support is phased out will likely act as a drag.”
However, spending in some of the industries hardest hit by Covid-19, including retail, restaurants and hotels, has rebounded back to last year’s levels, revealed Barclays. Britons increasingly switched spending from the likes of food and drink to hospitality as consumers “normalise” their purchases, said Mr Montagne.
It came as OpenTable figures revealed that diners have rushed back to restaurants to take advantage of the Chancellor’s discount scheme. The number of seated diners from online, phone or walk-in reservations was back in positive territory year-on-year for the first time since early March on Monday, Tuesday and Wednesday.