Feeling the Festive Squeeze: How UK Shoppers Are Balancing Christmas Budgets in 2025
As the holiday lights twinkle and carols fill the air, many UK households are grappling with the familiar tension between festive cheer and financial reality. Despite total festive spending projected to hit £24.6 billion – a 3.5 percent rise from 2024 – consumers are feeling the pinch from rising prices, with average per-adult outlay climbing to £461 amid cautious budgeting. At Cutts & Co Accountancy, we see this every year: clients determined to make Christmas magical without derailing their finances.
A Mixed Picture of Spending Intentions
Recent surveys paint a nuanced view of consumer sentiment. PwC’s Festive Predictions Survey reveals that 15 percent of shoppers plan to boost their spending this year, while 14 percent aim to cut back – a slightly more downbeat outlook than 2024, when optimism ran higher. Deloitte echoes this, finding 30 percent of UK consumers intending to spend more, outpacing the European average of 23 percent, though younger adults aged 18 to 34 are leading the charge, nearly twice as likely to increase budgets as older groups.
The Office for National Statistics adds detail from November 2025 data: among 87 percent of adults planning Christmas purchases, 38 percent expect to spend more than last year, rising to 55 percent for those aged 16 to 29. Yet caution prevails – 41 percent plan to buy gifts earlier to spread costs, and another 41 percent intend to reduce overall spending. Women (48 percent) and those aged 30 to 49 (47 percent) are most likely to trim budgets.
This push and pull reflects broader pressures. Cebr forecasts average household Christmas spending at £541 nominally – the highest since 2018 and above pre-pandemic levels – but in real terms, it is down 0.9 percent from 2024 and 24.8 percent below the five-year pre-pandemic average, as inflation erodes purchasing power. Food prices, in particular, are driving up costs without volume gains.
Where the Money Goes: Priorities and Cutbacks
Food and drink top the list, with 27 percent of consumers planning higher outlays due to grocery inflation, family gatherings, and premium treats – a net increase of 13 percent in intention over last year. NielsenIQ predicts £20 billion on Christmas groceries alone, peaking at £5.7 billion in the week ending 20 December. YouGov’s survey aligns, with a median £150 expected on festive food and drink.
Presents remain a cornerstone. Median total gift spend hovers at £300, but it varies. Parents average over £100 per child (61 percent for under-18s), with 27 percent exceeding £200. Partners see similar splits, with men outspending women. Grandparents cap at £50 to £100 for most grandchildren. Non-food retail claims 67.4 percent of spending (£364 per household), covering gifts from department stores and clothing.
When budgets tighten, cutbacks hit experiences first – restaurants, events, and clothing – rather than vouchers, home hosting, or décor. One-third of consumers opt for fewer or cheaper gifts amid cost-of-living worries, favouring sustainable alternatives. The ONS notes 25 percent dipping into savings and 14 percent using credit plans.
Generational and Shopping Shifts
Younger shoppers are reshaping habits. Nearly a third of 18 to 24-year-olds plan higher spending, with 25 percent shopping early. 23 percent of 25 to 34-year-olds follow suit, and over half of 25 to 44s wrapped up by December. They are also tech-savvy: 42 percent of 18 to 34s use generative AI for decisions, compared to just 4 percent of those over 55, and 38 percent consult influencers.
Online dominates, at 55 percent for home delivery plus 9 percent click-and-collect – 64 percent total, the highest post-pandemic. In-store holds 36 percent, with supermarkets and discount outlets popular offline. Asda reports weekly family spending power at £257, up £5.67 year-on-year, hinting at some resilience.
Smart Strategies from Cutts & Co Accountancy
At Cutts & Co, we help clients turn these trends into actionable plans. Here is how to ease the squeeze:
Budget early
Track expected spends – £300 for gifts, £150 for food, £50 to £100 for events per YouGov – using spreadsheets or budgeting apps. Allocate 50 to 60 percent to essentials like dinner and core gifts.
Leverage tax perks
Claim Gift Aid on charity donations for tax relief, or use salary sacrifice for holiday savings if employed. If self-employed, deduct business-related festive costs such as client meals.
Spread the load
Shop early like 41 percent of Brits, or set up direct debits for January bills to avoid credit traps – used by 14 percent.
Hunt for value
Prioritise food and drink deals, as 27 percent are increasing spend there, but compare online versus in-store to find savings. Consider experiences over physical gifts – they may bring longer-lasting joy at lower cost.
Review finances post-holidays
With inflation reducing real spending power, it pays to analyse outcomes. Book a free consultation with us to optimise your 2026 taxes, ISAs, or pension plan amid rising costs.
Consumers show resilience – 44 percent feel they have enough to enjoy the season – but prudence prevails. Retailers expect late surges, as most shopping clusters in December. By planning ahead, you can savour the season without January regrets.
For personalised advice, contact Cutts & Co Accountancy. Let us help make your festive finances as merry as possible.
