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Daily Mail
a day ago
- Business
- Daily Mail
Squeezed Britons cut back on the essentials - so they can continue splashing out on holidays and Netflix
Shopping and energy bills rising? Worried about the economy? Maybe it's time to book a holiday. New figures show that households are responding to the cost of living squeeze by scrimping on essentials while splashing out on lipstick, Netflix and overseas breaks. Data from Barclays covering ten years of consumer spending reveals that households are responding to tougher times by prioritising beauty, entertainment and travel. It found that over the past three years, 'discretionary' spending had risen by 9.2 per cent a year on average, compared to 5 per cent for essentials. That was despite nearly half saying they do not feel better off than they did a decade ago and two-thirds paying more attention to their budget. At the same time fewer are optimistic about the economy, with just 28 per cent confident about the outlook, down from 45 per cent in 2015. But the report said: 'Even when making cutbacks, people are finding room in their budgets to spend on the things they love.' Last year, overall retail spending fell by 0.4 per cent yet there was a 5.9 per cent rise for travel, a 5 per cent increase for entertainment and a 5.9 per cent boost for pharmacy, health and beauty purchases, the figures showed. Barclays UK chief executive Vim Maru said: 'Over the past decade, consumers have become savvier and more mindful about their spending. At the same time, they are more willing to spend on the things they truly value like travel and entertainment.' The report covers a period during which a spell of double digit inflation left households struggling to make ends meet. A steep rise in interest rates helped bring the spiral of price rises under control – but pushed up costs for mortgage borrowers. And shoppers are still living with the consequences, with the report showing that they are increasingly aware of prices and concerned about 'shrinkflation' – when retailers protect their profits by selling a smaller packet of a product but still charging the same. But it also showed that spending on travel has grown consistently since April 2021 when pandemic restrictions were lifted. Spain and France have remained the preferred destinations though Turkey has moved up the rankings from eighth to fifth – highlighting its status as a more affordable destination. And 33 per cent now spend a greater share of their income on getaways than they did a decade ago. Meanwhile staycations are preferred by more than a third while 38 per cent say they use social media as a guide on where to visit. 'Looking back over the past decade, no single event has reshaped travel quite like the pandemic,' the report said. 'It fundamentally changed how people value their time away – turning holidays from occasional treats into emotional essentials. Consumers are now more willing to prioritise spending on meaningful escapes.' The report also revealed increases in spending on live entertainment, as fans splash out on events such as Taylor Swift and Oasis concerts. Average monthly spending on entertainment has risen by 17.3 per cent since January 2020. Meanwhile, 88 per cent of consumers are signed up to digital content subscriptions such as Netflix, with spending on such products up by 47.5 per cent since the start of 2020. Those who are signed up on average pay £50.60 a month. People are also spending more on beauty and going to the gym – each up by an average of more than 10 per cent a year in the last three years. 'Consumers may be cutting back elsewhere, but when it comes to self-care, they're willing to spend,' the report found. 'People are investing not only to look good but to feel good too.'
Mint
26-05-2025
- Business
- Mint
Ring-Fencing Was a Good Idea That UK Banking No Longer Needs
(Bloomberg Opinion) -- UK banks want the government to abolish a key piece of post-financial crisis regulation that forces them to keep ordinary depositors' money legally separate from their trading and investment-banking business. This uniquely British setup, known as ring-fencing, limits the kind of lending banks can do and raises their costs. Well, most lenders don't like it. Barclays Plc alone is happy with the rules, which may be because it is uniquely placed to benefit from any protections they afford. I was always a big supporter of the idea behind this separation, but I'm no longer convinced the setup achieves much at all — for depositors or for Barclays. Ring-fencing is back in the news as the UK government looks desperately for anything that might stimulate investment and growth. The Bank of England is looking at ways to further relax their impact after having already made some changes in February. Big banks wrote to Britain's finance minister, Rachel Reeves, last month saying the rules should be scrapped, and a string of executives from large and small banks gave more views in front of a parliamentary committee last week. Vim Maru, chief executive officer of Barclays UK, reiterated the bank's case that the cordon around retail deposits has boosted financial stability and trust in lenders. Other countries have seen banks stumble and fall in the past couple of years, he said, while the UK has been immune. 'I think that is because we have ring-fencing,' Maru said. Other big banks, like HSBC Holdings Plc and NatWest Group Plc, complained about the additional costs for IT services, reporting and governance (a ring-fenced subsidiary needs its own independent board of directors). Executives also claim it leaves them stuck with redundant cash. 'I really think that a review now, to try to recalibrate that so that you are putting more oxygen into the economy, would be timely,' Ian Stuart, CEO of HSBC UK, told the committee. He also pointed out that US investment banks with small retail brands are free to raise UK deposits and use them wherever in their investment banks they wish. Ring-fencing doesn't apply until deposits exceed £35 billion ($47 billion), which rose from £25 billion in February. So, Chase UK — the British digital brand of JPMorgan Chase & Co. — or Goldman Sachs Group Inc.'s Marcus can use ordinary people's cash for 'casino banking,' but Barclays, HSBC or NatWest can't. In the context of JPMorgan's massive balance sheet, UK deposits aren't much, but they're still a nice source of a little cheap money, and US lenders don't need any more competitive help. The ring-fencing threshold was raised to give small, local challenger banks and fintechs room to grow, but for them this isn't the hurdle that hurts. Starling Bank Ltd. and peers such as Monzo Bank Ltd. are less hemmed in by lending restrictions and more by capital requirements that kick in sooner. The so-called MREL rules govern how much equity and loss-absorbing debt a bank must issue and start to apply when total assets reach £15 billion to £25 billion. Raman Bhatia, Starling CEO, told Parliament on Thursday that small lenders' capital requirements can jump by up to two times at that point. This is a much lower boundary than in Europe, where MREL rules start applying to banks with assets of €60 billion ($68 billion) to €100 billion, according to industry executives. If the ring fence isn't a competition for challenger banks, it might be for JPMorgan's Chase UK brand, which would need lending restrictions, an independent board and so on if it wanted to compete harder with Britain's four big incumbents on their own turf. Maybe that's a benefit to Barclays. Its UK business is good but produces a lower return on risk-weighted assets than HSBC's UK business, while also deploying more of its deposits into lending than HSBC. Still, if JPMorgan really saw value in taking on UK lenders, it could afford to go after market share with or without the ring fence. The real value for Barclays might instead lie in the size of its investment bank, which is a much bigger proportion of the group than for peers. Trading and capital markets account for 56% of Barclays risk-weighted assets, although it has a target to get that down to 50%. At HSBC, the whole corporate and institutional unit, which is a broader business than straight investment banking, accounts for 46% of the balance sheet. At other UK lenders, the proportion is lower still. So perhaps Barclays is more worried than rivals about testing depositor trust if they realized they were relatively more exposed to global financial markets. It's possible, but I'm dubious it makes any difference. Inside the ring fence, retail deposits are mostly insured up to £85,000 — which could soon rise to £110,000. And that insurance is paid for by industry levies, not the taxpayer. If ordinary people are aware of ring-fencing at all, they'll be more aware of deposit insurance and the protection that gives them. If government or regulators really believe removing the ring fence increases the likelihood of bank runs, a sensible countermeasure could be to increase the scale of the deposit insurance fund to reassure people about the speed of recoveries if a big bank fails. The final part of ring-fencing that really matters is the assurance it gives that a UK retail bank's core services will continue to function if the larger group it's part of gets into real trouble. But even that is also covered by the detailed resolution planning regime that banks must meet. Ring-fencing was a good idea that has become redundant. Scrapping it won't boost UK growth suddenly — it'll take several years to pass and then implement the legislation, while banks will face another round of costs to restructure their businesses again. But it does just seem like a friction that no longer serves a purpose. More From Bloomberg Opinion: This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. Previously, he was a reporter for the Wall Street Journal and the Financial Times. More stories like this are available on
Daily Mail
20-05-2025
- Business
- Daily Mail
Barclays boss blames third-party software for huge IT outage earlier in the year
Barclays suffered a 'software issue' and not a cyber attack when its systems went down in January, its chief executive told MPs today. Speaking to the Treasury Select Committee this morning, Barclays boss Vim Maru apologised to customers for the IT outage on 31 January. Barclays customers experienced three days of outages, meaning they were unable to make essential transactions, including mortgage payments. The bank previously told the Committee that it expected to pay between £5million and £7.5million to customers in compensation. Maru told MPs that the issue was 'not a cyber or malicious act' and that the bank had looked into whether the issue had been because of underinvestment or because it was pay day. 'We don't find any correlation between those things,' he said. 'A software issue was the root cause. We've worked with a third-party provider that provides us with that software. 'We've learned the lessons around that, we've put a fix in place that means we won't have a recurrence. 'Looking forward, there's a further enhancement that we're making that's in the middle of implementation.' Maru said the bank had invested 'many, many tens of millions of pounds to make sure that our systems are in the right place' and that its incident levels have been dropping. It comes just weeks after M&S, Co-op and Harrods faced large-scale cyber attacks which froze critical systems. HSBC boss Ian Stuart told the Committee that cybersecurity 'does keep me awake [at night]' and 'is now very much top of the agenda' as the bank invests 'hundreds of millions'. 'We could be attacked, and we're being attacked all the time. So the defence mechanisms are critical. 'The amount of money we're all spending on our systems is absolutely enormous … it has to because our customers rely on our systems.' 33 days of unplanned outages in the past two years.
