Mastercard forecasts 3.4% growth in holiday spending

The forecast is based on Mastercard SpendingPulse insights covering in-store and online purchases, regardless of payment method. This is nominal growth, not adjusted for inflation.

This resilience reflects a relatively stable economic environment. Labour markets across much of Europe remain strong, with unemployment rates close to historic lows. Although households continue to factor in inflation, broader price pressures remain under control. Core inflation in the euro area, which excludes volatile energy and food prices, has been relatively stable over the past six months. However, the rise in natural gas prices since the summer is expected to increase energy costs during the holiday season, with additional pressure from higher fuel prices. Price pressures during the holiday season are also likely to begin spreading to goods, services and food, further reinforcing European consumers’ longstanding focus on value for money.

Holiday shopping at all hours

Physical stores continue to play an important role in holiday shopping, particularly in the final days before Christmas in categories such as toys, jewellery and cosmetics, while e-commerce continues to lead seasonal spending growth. Since the early 2010s, online spending growth has consistently outpaced in-store spending growth, with shopping peaking around Black Friday and Cyber Monday. Higher-end fashion, cosmetics, sporting goods and electronics typically see the largest increases in online spending as shoppers take advantage of seasonal promotions.

Late-evening shopping is becoming increasingly common. The share of online spending after 8 p.m. during the holiday season is rising across Europe, reflecting how consumers fit gift shopping into their busy schedules. In Spain, almost a quarter of online holiday spending takes place after 8 p.m. In the United Kingdom, the share of online spending after 8 p.m. rose from 12% in 2019 to 15% between January and September 2025, reaching as high as 17% during the holiday season.

From window shopping to conversations with AI: artificial intelligence enters the holiday season

Artificial intelligence is increasingly present in everyday life, while the development of agentic commerce is giving consumers new ways to find products, compare options and seek value for money.

To better understand the impact of artificial intelligence on holiday spending, MEI analysed purchasing patterns among users with subscriptions to AI tools and those without such subscriptions during two key shopping periods: Black Friday weekend, including Cyber Monday, and the final days before Christmas, from 20 to 25 December. Some of the key findings:

Users with AI subscriptions make a larger share of their holiday spending in lifestyle categories, such as fashion, cosmetics and home furnishings, over Black Friday weekend, while users without AI subscriptions are more likely to focus on buying discounted electronics. In Spain, 15% of holiday electronics spending by users without AI subscriptions takes place between Black Friday and Cyber Monday, compared with 12% among users with AI subscriptions.

Users with AI subscriptions are also more likely to shop at the last minute. Across major gift categories, they make a larger share of their in-store spending just before Christmas. Jewellery is a popular choice towards the end of the season, particularly in Czechia, Italy and the United Kingdom.

Overall, users with AI subscriptions tend to concentrate their spending around the shopping peaks of Black Friday and the final days before Christmas, while users without AI subscriptions spread it more evenly throughout the holiday season.

Consumers drive holiday growth for small businesses

Small businesses on urban shopping streets could benefit from increased spending on experiences, services and a personal touch that is difficult to replicate online. Compared with the rest of the year, during the holidays they see the largest seasonal increases in their share of in-store spending in categories such as travel agencies in the United Kingdom (+4 percentage points), live performances in Italy and Poland (+5 percentage points), arts and crafts stores in Spain (+4 percentage points), florists in Czechia (+4 percentage points) and independent cinemas in France (+3 percentage points).

Business spending also peaks in the final quarter: almost a third of annual restaurant spending by small and large businesses in Europe takes place in the fourth quarter. This extends beyond hospitality: small businesses across Europe also make almost a third of their annual spending on electronics and household appliances in that quarter. Business spending also has a particularly large impact because business transactions are typically substantially larger than consumer transactions. For example, in the United Kingdom, the average value of a holiday restaurant transaction made with a small business card is twice that of a consumer transaction, while transactions made with large corporate cards are around five times larger.

Tropical getaways and European city breaks among winter travel trends

Based on year-on-year growth in the share of bookings for the holiday period in November and December 2026, Asian destinations are seeing the largest increases in popularity among European travellers. Phuket tops the list, while Tokyo and Bangkok are also recording significant growth. Closer to home, city breaks in Poland and Italy, as well as Bratislava, are attracting growing interest, while the Canadian cities of Montréal and Toronto also rank among the fastest-growing long-haul destinations.

Natalia Lechmanova, Chief Economist, Europe, at the Mastercard Economics Institute, said: “The 2026 holiday season reflects the resilience of European consumers and their growing focus on digital channels. Shoppers are embracing greater flexibility, shopping online at all hours and turning to artificial intelligence to help them navigate holiday shopping. At the same time, spending on experiences, travel and local businesses highlights their enduring desire to celebrate, connect and create moments that matter to them during the holidays.”