Best of Times, Worst of Times: The U-K-shaped consumer: European Retail, Beverages and Hotels

Research evidence excerpt

Best of Times, Worst of Times: The U-K-shaped consumer: European Retail, Beverages and Hotels

23 June 2026

European Retail, Beverages and Hotels

Best of Times, Worst of Times: The U-K-shaped consumer

“It was the best of times, it was the worst of times”. The famous opening line of Charles William Woods

+44 20 7676 6806 Dickens’ ‘A Tale of Two Cities’ captures a period of contradiction: the French aristocracy

william.woods@bernsteinsg.com indulging in opulence and privilege, the peasantry experiencing poverty and oppression.

While 2026 is thankfully not 18th century France, shifting class dynamics remain more

Richard Trainor topical than ever, from the US K-shaped economy to the squeezed Chinese middle class. In

+44 20 7762 1050

richard.trainor@bernsteinsg.com this note, we examine the UK.

The UK consumer under pressure. We leverage ONS household spending data which Trevor Stirling

+44 20 7676 7521 reveals detailed spending patterns by category, income and age over time. The data tells

trevor.stirling@bernsteinsg.com the story of a consumer under pressure, with all income groups having seen expenditure

since 2019 shift towards essentials and away from discretionary. There is an element of

Nadine Sarwat, CFA K-Shaped behaviour with the lowest decile seeing the largest shift towards essentials and +44 20 7676 6849

nadine.sarwat@bernsteinsg.com away from discretionary. The biggest driver of this has been increases in housing costs

and fuel/power. However, discretionary spend has fallen across categories, in particular in

Richard J. Clarke, FCA alcohol, clothing and restaurants where spend has fallen across all deciles. The hardest hit

+44 20 7676 6850 are the youngest low-income consumers whilst older consumers are much more resilient.

richard.clarke@bernsteinsg.com