UK economic confidence declines amid global conflict and rising fuel costs

Confidence in the UK economy has dipped two percentage points last week to 23% as tensions in the Middle East prompted concerns over inflation and energy prices, according to the latest Barclays Consumer Spend report.

Polling conducted between 3-6 March found that confidence in the UK, European, US and global economy all declined following the recent outbreak of conflict in the Middle East. 

Four in five (82%) are concerned about the impact of tensions in the Middle East on fuel costs, energy bills (81%) and inflation (78%).

Food prices (76%), supply chain disruption (70%), economic slowdown (69%) and travel disruption (56%) are also areas of concern. A further three in five (59%) cite the potential negative impact on their household finances.

 Almost half (46%) are taking action in response, including making the effort to cut energy consumption (16%), reducing discretionary spending (13%), building up a savings buffer (10%) and delaying major spending decisions (10%). 

Despite this, overall card spending increased by 1.0% in February, a slight rise from January’s 0.8%, though still below the CPIH inflation rate of 3.2%. 

Essential spending declined by 0.6%, with 63% seeking ways to cut the cost of their weekly shop. One in three (33%) say they always avoid paying full price, and 24% reportedly get a “thrill” from finding a discount. 

Additionally, three in 10 (30%) happily switch brands to obtain better value, while 29% try to maximise loyalty points obtained from travel miles and rewards programmes.

In contrast, non-essential growth reached an 18-month high of 1.8%, driven largely by the entertainment and digital subscription sectors.

The entertainment sector grew by 9.9% in February, bolstered by a 14.0% increase in live show and concert ticket sales. Digital content and subscriptions also reached their highest growth level since 2021, at 12.2%, attributed to rising subscription costs and popular streaming releases.

Additionally, the overall eating and drinking category increased 2.4% in February, with restaurants, cafes and bakeries up 2.9% and bars, pubs and clubs up 3.3%. 

Takeaways saw less of an uplift, at 1.3%, as 23% say they’re cutting their consumption of fast food and takeaways in an attempt to be healthier. One in three (33%) say health and fitness is a top spending priority for them this year.

In the health sector, while 53% report a focus on wellbeing, there is significant skepticism regarding GLP-1-friendly food products; 49% of consumers expressed confusion over the labeling, and 44% cited poor value for money.

Jack Meaning, chief UK economist at Barclays, said: “This insight into consumers’ reaction to the evolving situation in the Middle East highlights the economic risks for the UK if the conflict doesn’t de-escalate. The start of 2026 had brought signs of growth and improving sentiment. A prolonged bout of uncertainty risks snuffing that out before it has had a chance to really get going.”

Karen Johnson, head of retail at Barclays, added: “February’s data highlights the balancing act shoppers face in navigating rising costs amidst global uncertainty. While we’re seeing a continued appetite to spend on categories such as entertainment and wellness – obtaining value for money and savvy spending will remain a focus in the months ahead.”