Consumer spending in Great Britain dropped by more than 32 per cent in the run up to the government-imposed lockdown.
A new study by researchers at the University of St Andrews and Heriot Watt University found that spending declined dramatically as the Covid-19 pandemic took hold.
Dr Dimitris Chronopoulos and Professor John Wilson, of the Centre for Responsible Banking and Finance at the University of St Andrews, and Dr Marcel Lukas, of Heriot Watt University, studied 20 million anonymised transactions made by around 100,000 individuals during the onset and spread of Covid-19.
The key findings of this analysis were:
- Overall spending declined by more than 32 per cent.
- Groceries spending increased 13-18 per cent on a week-to-week basis for the two weeks following the pandemic announcement by WHO, then declined after the government lockdown.
- Spending on dining and drinking increased during the early part of the virus spread, before declining by more than 40 per cent.
- Consumers based in Scotland appear to adjust spending more markedly during the early stages of the virus outbreak.
- Consumers based in the South East, South West, and especially London reduced discretionary spending faster than counterparts located in other regions.
The data was provided to the researchers by Money Dashboard (an Edinburgh-based Financial Technology firm) and covers the period 1 January to 7 April this year (2020).
Dr Lukas of Heriot Watt University said: “Investigating the impact of Covid-19 on consumer spending is very challenging given that official statistics produced by government often come with a significant time delay.
“Fortunately, recent advances in information technology and financial applications have enabled the real time collection of transaction level data which has allowed us to conduct a fine-grained analysis of patterns in consumer spending as they occur.”
Dr Chronopoulos added: “It is becoming clear that the spread of the Covid-19 virus and the government lockdown are having significant and varied impacts on the level and composition of consumer spending patterns across Great Britain.”
Addition findings were:
- Males spend significantly more than females.
- Younger individuals spend more than older counterparts.
- Higher income individuals spend more than lower income counterparts.
Reflecting on the results of the ongoing research, Professor Wilson added: “Our results are preliminary, but do provide a starting point for policymakers in understanding the real-time and varied impacts of Covid-19 on consumer spending.”
The paper ‘Consumer Spending Responses to the COVID-19 Pandemic: An Assessment of Great Britain‘ by Dimitris Chronopoulos, John Wilson and Marcel Lukas is available on the Centre for Responsible Banking and Finance website.
The paper is also available for download from the Enterprise Research Centre website.
The high frequency transaction level proprietary dataset of 98,796 consumers and 19.8 million transactions was made available by Money Dashboard.