Families start to spend again...

After months of belt tightening and keeping their purse strings taut, UK consumers have lifted their heads above the trenches.

Two surveys, looking at disposable incomes and consumer spending
respectively, have recently been released by Deloitte and Markit. Whilst Deloitte’s Consumer Tracker saw worries about disposable income dip by 10% in the last year (from 43% of respondents to 33%), Markit said October saw the “least marked” deterioration in household finances for two years; and that consumer confidence was at its best since Q3 in 2011 and that should lead “to a likely upturn in consumer activity.” Markit reported that although household budgets remained under stress, given that we have seen lower inflation figures published in October, together with a marked improvement in the employment figures, their economists believe that should result in increased consumer spending across the next twelve months. This should further add to the anticipated 0.7% growth seen in spending in Q3 2012.


They added: “Household finances were supported by a near stabilisation of employment income in October, alongside a reduced squeeze on cash availability.”

Although 29% of their respondents said that their household budgets had deteriorated and only 7% said they had improved, this still signaled: “a much weaker squeeze on households’ financial well-being than had been the case for around the past two years.”

At the same time the chief economist of Deloitte was quoted as saying: “The Consumer Tracker points to a reduction in the stress on the household, with consumers more positive about their income and employment and working hard to balance the books by reducing their levels of debt.”

Given that consumer spending is responsible for about 60% of economic output in the UK - which has been depressed since 2010, because of unemployment, pay rates below the rate of inflation, and a £1.5 trillion household debt burden – any increase seen here is very good news and should continue to impact positively on the forthcoming GDP figures due in 2013.

Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Services Authority. It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.

NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.