Advertise with fastmoving.co.za
 
 

 UK consumers cut back on spending for a third month in July as house-price growth slowed sharply, dealing yet another blow to the economy.
UK consumers cut back on spending for a third month in July as house-price growth slowed sharply, dealing yet another blow to the economy.

UK economy takes a hit as consumer spending slumps further

ECONOMIC NEWS

By Hannah George and Cat Rutter Pooley - Aug 7th 2017, 12:47

UK consumers cut back on spending for a third month in July as house-price growth slowed sharply, dealing yet another blow to the economy. 

The broad-based weakness is being blamed on a squeeze on pockets as inflation outpaces wage growth as well as concerns about the health of the economy. The latest figures leave both household expenditure and the property market at their weakest in more than four years.

A report from IHS Markit and Visa showed that consumer spending dropped 0.8% year-on-year, with clothing, household goods, food and transport among the worst hit. Home-price increases weakened to an annual 2.1% in the past three months, its slowest since April 2013.

The two downbeat reports come days after the Bank of England (BoE) downgraded its economic outlook and Governor Mark Carney warned that Brexit uncertainty is weighing on business and households.

BoE Deputy Governor Ben Broadbent said Friday that the “maximum rate of pain” for consumers will soon pass, though any improvement could be modest. The central bank also cut its forecast for wage growth last week.

In addition to the income squeeze, consumer expenditure has been hit by concerns among shoppers about the broader outlook after the economy slowed dramatically in the first half of the year.

“Alongside the renewed squeeze on household budgets, uncertainties linger over the direction of the economy,” said Annabel Fiddes, an economist at IHS Markit. “This makes it seem unlikely that consumer spending will recover in the current challenging conditions.”

The July consumer figures showed a 6% increase in spending at hotels, restaurants and bars. Markit said this may be partly related to an increase in “staycations,” with the weaker pound making foreign holidays more expensive. Sterling, little changed on Monday, has fallen 13% since the Brexit vote in June 2016.

According to the Halifax report, house prices slipped 0.2% in the three months through July against the previous quarter. That’s a fourth consecutive decline, the first time that’s happened since 2012.

On an annual basis, the pace of growth is now just a fifth of its peak in March 2016. The market has also been damped by tax changes in 2016 and affordability concerns after years of rampant house-price gains.
Fin24.com 

Read more about: uk | economy | consumer spending

Related News

SA on track for third year of moderating inflation
25/11/2019 - 09:41
SA’s largest asset manager Investec says SA is likely to see average inflation of 4.5% in 2020, with price pressure consistently moderating since 2016.

Sales at Truworths Africa outperform its UK business
12/11/2019 - 13:24
Truworths, which was forced to write down its UK business by a third recently, said that retail sales in that country were flat in the 18 weeks to November 4, although its African operations performed better.

Why are these five UK retailers thriving as most others battle?
12/11/2019 - 10:32
British shops are being battered as the shift to e-commerce, intense competition and the fallout from Brexit cause catastrophic levels of store closures and job cuts.

How a US-China trade deal could benefit SA
11/11/2019 - 09:53
Africa is poised to become the “land of opportunity” for bond and equity investors should the US and China strike a trade deal, Bank of America (BofA) says.

Manufacturing sentiment improved in October
05/11/2019 - 12:52
Manufacturing activity recovered in October, improving on the previous month’s revised figures and beating market expectations.