According to a recent report from Visa, UK consumers reduced their spending in February to the lowest level since February 2012, suggesting that the broader economy could slow in the first quarter of 2018.
This will come as a blow to Chancellor Philip Hammond, who has hinted at an end to years of fiscal austerity following a reduction in the national debt level after it has been growing for 17 continuous years.
However, according to Visa’s survey, consumers are not feeling the benefit yet, with rising living costs, lacklustre wage growth and relatively subdued consumer confidence all playing a part in the ongoing reduction in household spending.
Visa said that spending on cards fell by 1.1 per cent in February, after a decrease in nine out of the past 10 months, and that the first quarter of this year could well be the “worst on record”.
To add to the Chancellor’s woes, earlier this month, the National Institute for Economic and Social Research (NIESR) estimated that quarterly growth had weakened to 0.3 percent from 0.4 percent at the end of 2017, and the recent unusually snowy weather might deal a further blow to growth.
Meanwhile, the British Retail Consortium (BRC) has reported that the number of people on the high street was down by 0.5 per cent in the first part of February, before the bad weather hit.
Domestic consumer spending makes up the largest part of British economic demand, but businesses, and in particular manufacturers, have been buoyed by a booming world economy, leading to improved export figures.