IFS Study Says UK Consumers Not Spending

The average UK household is out of the worst of the recession as incomes near what they were before the 2008 banking crisis, according to a new report by the Institute for Fiscal Studies (IFS).

This is usually good news for retailers as following previous crises the British public had used their newfound cash to stack their fridge with food and filling the car with petrol – but not so much this time.

The amount of non-durables (items that are bought and used more or less straightaway such as food and fuel) consumed was 3.8% lower in the third quarter of 2014 than it was in quarter one of 2008. At the same point after the 1980 and 1990 recessions, it was up on pre-crisis levels by 14.4% and 6.4% respectively.

This data suggests that UK households may be feeling a sort of post-recession “shell shock”, adjusting their weekly spending to reflect their perception that less money is available.

The IFS report explains:

If households make large adjustments to their consumption of non-durable goods, it might indicate that their expectations about the amounts they have available to spend over their lifetime have changed considerably, or that their ability to finance consumption through the credit market has been reduced, or both.

In other words, households might be worried that they are never going to have as much to spend as they used to – and despite today’s good news about incomes, that is a scary thought for both retailers and the government.

via The Guardian

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.