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More than a third of Brits plan to spend less on Christmas compared to last year, according to the results of a new global survey of 23,000 families. The report has serious implications for UK retail stocks, as UK retailers move into the Christmas period after a very poor year for earnings in most cases.

The research carried out by Ferratum, the international financial services company, analysed the Christmas plans of more than 23,000 families in 19 different countries. It found that 37% of Brits are planning to spend less on Christmas this year compared to 2017, with 43% planning to spend the same and just 20% planning to increase their spend.

Brits are allocating 23% of their disposable income on Christmas this year, which is the fifth highest in the world and more than double that of Germany (10%) and the Netherlands (10%) who are spending the least. Mexico tops list of nations spending most of their disposable income on Christmas (48%), followed by Brazil (38%), Romania (29%) and Bulgaria (25%).

Tony Gundersen, Ferratum UK Country Manager, said:

“More than a third of Brits are proactively looking to cut their Christmas shopping budget this year. With a fall in real wages and uncertainty surrounding Brexit, families are being more cautious with their spending and we are certainly seeing a ‘Brexmas effect’. Whether it’s skipping secret Santa in the office or shopping around online for better deals, many people are intending to be more frugal this year. Only 20% of people say they are going to splash out more than they did last year and most of that will go on groceries and presents for children.”

The most popular gift items are toys and games with 16% of respondents stating that they will be at the top of their Christmas list. Clothing (12%), Gift cards (7%) and alcohol (7%) were other popular choices.

No good news ahead for UK retail stocks

According to the survey, 52% of the respondents will cover the costs of Christmas holidays with savings, while 23% said they would partially cover the expenses with loans and 13% planned to use credit cards. The research does not make confidence building reading for investors who are hoping for a U-turn from UK retail stocks in 2019.

The survey was conducted by Ferratum Group, which surveyed its active customers in 19 countries globally via web survey with a standardised questionnaire. Incomes were stated in local currency, and relative Christmas consuming is calculated by the ratio of a family’s monthly disposable income in each country. Disposable income was adjusted by each country, individual purchasing power parity based on 2014 figures by The World Bank.

Over 23,000 households participated in the survey. The age of respondents ranged from 18 years to 61 years. 57% of participants were women and 43% men. The average available income of participating households ranged between €866 – €3,861. The average household size among the respondents was 2.9 persons.

In addition to demographic factors, respondents were asked about their disposable monthly net income, how much they spend on Christmas holiday, what activities they spend their money on, and if they are planning on using AirBnB services or online banking while travelling abroad. The survey used each country’s respective currency. Responses were evened out to reflect the respective purchasing power of each country. All survey responses were anonymous.

Further reading for Armchair Traders:

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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