Half of Britons plan to cut down on Christmas gifts and activities to try to save money amid the biggest squeeze on household budgets in decades, a survey shows.
Of the 48 per cent of respondents who said they would rein in spending over the festive season, 59 per cent plan to cut down on gifts while 44 per cent will save money on turkey and mulled wine among other food and drink. Forty-two per cent said they would spend less at Christmas parties and social events, according to a poll published by Barclaycard.
Expensive gifts will be a low priority, with 21 per cent of people planning to set a spending limit on gift purchases with their friends and family, while 19 per cent have started their Christmas shopping earlier to spread the cost and 10 per cent plan to buy more second-hand items as gifts.
Some consumers will turn to secret Santa — where family or friends have to guess who gave them a mystery present — to keep spending down, separate research by eBay showed.
“We know some of the customers eBay are speaking to are knocking a few people off their Christmas gifting list and opting for secret Santa so they don’t have to buy for everyone,” eBay said.
The online retailer and auctioneer forecast that the nation would wake up on Christmas morning to “pre-loved” or second-hand presents, having turned away from buying new products on Black Friday, on November 25, to save money.
The research from eBay, which covered 2,000 people, found that 52 per cent of them would be shopping for second-hand or refurbished products, with saving money as the incentive given by 56 per cent for changing their shopping preferences.
Black Friday has in past years represented the start the Christmas retail rush. But this year consumers are intending to spend at least £100 less on average than last year, as inflation and anxiety about the cost of living soars kick in.
Households are facing the biggest squeeze on incomes for decades as policymakers battle with inflation, which is at a 40-year high, rising borrowing costs and weakening global demand.
Real household income per capita fell for a fourth consecutive quarter in the three months to June, dropping by 1.1 per cent, according to figures published by the Organisation for Economic Co-operation and Development. Real household incomes fell in the second quarter in most OECD countries for which data is available.
Retail sales slowed in October in the latest sign that consumers are reining in spending on non-essential items in light of inflation at 10 per cent, the latest survey by the British Retail Consortium and KPMG showed. Sales rose by 1.6 per cent last month, compared with the same month in the previous year.
The rise in the value of sales masks a much larger drop in sales volumes once inflation is accounted for.
Spending on clothes fell as the milder winter allowed customers to delay purchases. Demand for energy-efficient appliances such as electric blankets and air fryers remained high.
Helen Dickinson, chief executive of the British Retail Consortium, said: “Christmas will come later than last year for many and may be more gloom than glitter as families focus on making ends meet, particularly as mortgage payments rise.”
She added: “Retailers hope the [football] World Cup and Black Friday, will give sales a much-needed boost ahead of Christmas. However, with little sign of cost pressures easing, government action is needed to support households.”
Dickinson added: “Retailers face an additional government-imposed £800 million inflationary increase in their business rates bills next year, so the government should freeze rates and reform the broken transitional relief system to alleviate cost pressures that are feeding through to higher prices at a time when people are least able to afford them.”
The retail and wholesale sector is worth £352 billion a year to the British economy and supports a fifth of the country’s workers, according to research by CBI Economics, the consultancy arm of the CBI. The sector, which has struggled to recover from lockdown and people tightening purse strings, supports 5.7 million jobs.
Matthew Fell, chief policy director at the CBI, has called for the government to intervene to avoid the rise in business rates scheduled for April, which he argues will present an “existential threat” to many businesses.
“Retail and wholesale businesses have remained at the epicentre of every economic ecosystem in the UK throughout the crises of the pandemic, war in Ukraine, supply chain disruption and surging costs,” Fell said.
He added: “The sector has often been the first line of defence during these economic headwinds, and continues to prioritise supporting households, as well as their employees, through these challenges.”
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Festive spending to suffer as households tighten belts