Consumer Christmas spending set to fall amid pandemic

People expect to spend an average of £627 this Christmas, down 5 per cent from £660 last year, according to the Hargreaves Lansdown Christmas Report.
Sarah Coles, personal finance analyst at Hargreaves LansdownSarah Coles, personal finance analyst at Hargreaves Lansdown
Sarah Coles, personal finance analyst at Hargreaves Lansdown

This expenditure includes £315 for presents, £156 for food and drink, £84 on going out, and £71 on extras like decorations and festive outfits.

The money people plan to spend on socialising has fallen almost a third from last year to £84. The report said people had already decided to slash their social budget before the second national lockdown was announced.

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Hargreaves Lansdown said the biggest rise is expected in food spending, which is up 7 per cent as people opt for treats at home rather than risk catching Covid-19 if they leave the house.

The exact figures were £315.20 for presents, £155.90 for food and drink, £84.20 on going out and £71.20 on extras, which adds up to £626.50

The reports said that 62 of consumers have changed their Christmas shopping plans because of the virus and 17 per cent of people will spend less on each person whilst 15 per cent will remove people from their Christmas list.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Santa will be tightening his belt this Christmas.

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"Millions of people are furloughed, millions face shorter hours, and hundreds of thousands of people have lost work altogether. We’re set for a festive season of Secret Santas and sale shopping."

Ms Coles said that young people are taking a hard line on present purchases and are more likely to be knocking people off their Christmas list, and slashing the budget for those who remain.

"The squeezed middle, meanwhile, are under pressure to keep buying for their family, and with a hefty food bill on top, they’ll actually end up spending more this year than last year," she said.

"Women, who buy the lion’s share of the presents, are taking more steps to keep a lid on their spending, and for a second year running men will outspend women this Christmas.

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"An awful lot of us are facing an uncertain Christmas, so we have to fight the temptation to overspend. It’s particularly difficult when we’re locked down and bored, and our options have been limited by the shops closing. However, we can all make a big difference with a sensible plan, a realistic budget, and the commitment to stick to it at all costs."

Ms Coles advised shoppers that they can spend less if they shop around and track down discounts.

"However, don’t be afraid to talk to your friends and family and make big changes too – like buying for fewer people and spending less on one another," she concluded. "Everyone is feeling the pinch this Christmas, and you may find they’re grateful for the opportunity to cut costs too.”

How we’re cutting costs this Christmas

1. 17 per cent will spend less on each person

"The easiest way to do this is to agree a smaller price limit on gifts with your family and friends. However, once you have agreed, everyone needs to stick to it or you’ll all be left feeling embarrassed," said Ms Coles.

2. 15 per cent will buy for fewer people

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"Agree this in advance, or people will wonder why they’ve suddenly dropped off your Christmas shopping list. Some families agree to only buy for children, while some friend groups will do a Secret Santa - so you only need to buy for one other person in the group," said Ms Coles.

3. 12 per cent will wait for discounts

"This is getting more rewarding, as Black Friday stretches for longer, and the Boxing Day Sales start well before Christmas. However, don’t leave things too late or you could run into delivery issues," said Ms Coles.

4. 9 per cent will shop around to cut costs

"This is always a sensible approach – whether you’re shopping online or on the high street," said Ms Coles.

5. 5 per cent will trade down to cheaper shops

"This can be particularly effective when it comes to buying Christmas dinner. You can get the top range from the discount supermarkets, and spoil your family without breaking the bank. When you do it elsewhere for gifts, make sure you’re simply avoiding paying for the ‘name’ rather than buying something that’s lower quality," said Ms Coles.

6. 5 per cent will trade down to cheaper items

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"This comes relatively far down the list, possibly because it’s the most obvious form of cost-cutting, and shoppers are looking for ways to spend less that aren’t as noticeable. However, in many cases, it really is the thought that counts. A thoughtfully selected, inexpensive gift often means far more than something far pricier that was bought without any real thought," said Ms Coles.

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