'Revenge spending' by Chinese shoppers to boost UK says bank boss
Expect a wave of pent-up consumer spending to significantly boost the British economy this year.
It’s heading to the UK from China and it’s called ‘Revenge Spending’ with shoppers there having accrued CNY6.6 trillion (£760 billion) in pandemic/lockdowns-induced excess savings over the past three years, according to banking giant HSBC. That’s equivalent to 5.4% of GDP in 2021, reported The Times newspaper.
The bank’s Global Research team report said China has been emerging from nearly three years of strict pandemic lockdown restrictions that have been a drag on the global economy.
David Maddison, director of UK retail and leisure at HSBC, said the “potential impact of this ‘revenge spending’ is therefore huge”.
He added: “Already we have seen the drastic impact of domestic revenge spending on luxury brands LVMH, Hermes, Ferragamo and Mulberry. This is only predicted to rise, given the higher-than-average demand for luxury goods from Chinese consumers. There is a significant opportunity for British businesses to capitalise on this Chinese demand.”
Mulberry backed up the prediction, telling The Times that there had been an “improving environment in China over recent months”, helping it to boost annual profits.
The report noted that American tourists fuelled a European luxury spending boom in 2022, prompted by a strong dollar and unrestricted travelling post-lockdowns.
“There is a hope and expectation that China will do as the Americans did, albeit to a greater degree, given the significant demand,” Maddison added.
While UK’s luxury retailers and support groups continue to push the government into reintroducing the VAT-free perk for tourist purchases, the news of high-spending Chinese consumers heading to Britain will come as a bonus to many businesses if the rules don’t change.
Copyright © 2023 FashionNetwork.com All rights reserved.