Hospitality, retail sectors brace for consumer pullback

This is amidst the Middle East tensions that are dragging on.

Consumers’ disposable incomes are falling as the conflict in the Middle East continues, increasing pressure on the retail and hospitality sectors as households rein in spending, according to RSM UK’s latest Consumer Outlook survey.

The survey of 2,000 consumers found that the share of income left over each month after essential spending fell to 22.1% in April 2026, down from 23.4% in February, before the Iran conflict escalated.

Amongst families, the decline was steeper, dropping from 26.9% to 23.1%.

Households are also increasingly relying on savings to manage rising costs.

The proportion of consumers planning to reduce savings contributions rose to 21% in April from 17% in February, whilst amongst families the figure increased from 14% to 22%.

More consumers also expect to dip directly into savings, with 9% saying they would do so in April compared with 5% in February.

Amongst families, that figure doubled from 4% to 8%.

“Unfortunately, the slowdown in spending is expected to accelerate as consumers take a 'wait and see' approach,” said Jacqui Baker, head of consumer markets at RSM UK.

“The first area that households typically cut back on during an economic downturn is retail spending and dining out, meaning there’s likely to be tougher times ahead for consumer-facing businesses,” Baker added.