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

Trade wars turn up the heat on local consumers
11/07/2018 - 09:24
South African consumers face more pain from potential global trade wars and fuel increases, global payments company Mastercard said in a statement.

Fuel price hike: Consumers brace for higher food, transport costs
04/07/2018 - 11:20
Consumers will be faced with higher travelling costs and the possibility of food price inflation as a result of the fuel price hikes which came into effect at midnight on Tuesday, economists have warned.

Three important technologies to slash manufacturing input costs
21/05/2018 - 14:34
Local manufacturing firms continue to face blustering headwinds – from heightened global competition from the likes of China and India, to sluggish demand and macroeconomic conditions, to critical skills shortages and labour issues. But technology can help to relieve one of the most common pain points that we’re seeing: the stubbornly high costs of production.

Lush introduces new automated payroll software
12/04/2018 - 16:24
Cosmetics retailer Lush is introducing new software to run its company payroll in the UK and Ireland, with a view to implementing it across international business operations.

Easter spend trends 2018
28/03/2018 - 09:06
As we fast approach Easter - the first holiday of the year, consumer spend is most likely going to be closely monitored by the retail and shopping centre industry. Renowned economist and speaker Daniel Silke said with regards to the looming Easter spend, there are contradictory forces at play.