UK consumer spending falls

UK consumer spending has fallen further as households continue to tighten their budgets.

Both package holidays and clothing sales have taken a bigger hit than expected as it is 0.2 percent down from the previous quarter.

Consumer spending in the UK is at is lowest ebb since 1995 as investment has fallen more than estimated during the third quarter as recession hit.

From the second quarter, gross domestic production has fallen by 0.5 percent and this is the first decline in over 16 years, and a closer analysis shows that consumer spending trends have changed.

According to a survey of 6,000 household’s spending patterns, the highest average household expenditure is on transport costs at a whopping £61.70 a week with leisure activities, housing and fuel bills next on the list.

Average expenditure continued to rise between 2006 and 2007 by £10 a week although since the recession has hit, the average expenditure with luxury items such as clothes taking a hit with average expenditure down to £22.

The fall in household spending is predicted to continue having been driven by the downturn in the property market.

Analysts such as Jonathan Loynes, chief European economist at Capital Economics, has indicated that the 2.5 percent cut in VAT will make little difference, due to the fact that spending patterns have had to change, resulting in the fall in consumer confidence.

Story link: UK consumer spending falls