Proactive Investors - Consumer sentiment has improved but the “outlook remains challenging,” according to JP Morgan.
The American bank surveyed 5,000 consumers across the UK, France, Germany, Spain and the US about their spending plans.
Findings suggested that consumers are less worried about their personal circumstances than in September.
Consumers also said spending plans are less conservative than six months ago, although 74% of respondents said they expect to reduce discretionary spending by over 6%.
Particularly, the broker said that the most cited area of cutbacks will be in socialising and eating out, which may spell bad news for UK stocks such as JD Wetherspoons, Mitchell & Butlers and The Restaurant Group.
Clothing is the next space where spending will be reduced, which could have some read across for Next, JD Sports and Primark owner Associated British Foods (LON:ABF).
In the UK, respondents said they would be spending less on home improvements and DIY, news that B&Q owner Kingfisher (LON:KGF) would not want to hear.
Much of the clawback in discretionary spending is linked to rising rent and mortgage rates, something 30% of respondents surveyed by JP Morgan expect to be impacted by.
One-fifth of those surveyed also said that pandemic savings have dried up, giving little leeway for spending.