British consumers are still very much helping the economy to continue to grow, with new figures revealing that they have been spending more money than they receive, for the ninth consecutive quarter at the end of last year. This represents a brand new record for consumer spending. Economic growth as a result of UK adults spending has helped to offset falling business investment across the country.
How much are UK consumers spending?
Wondering exactly how much is being spent? According to figures recently released by the Office for National Statistics (ONS), UK households have spent a whopping £4.4 billion more during the final quarter of 2018 than their monthly income. This is in comparison to the £7.2 billion of net borrowing in the previous quarter.
Consumer spending has grown despite Brexit
A surprising trend has been that consumers have helped to aid the UK’s economic expansion despite concerns that have been raised over Britain’s future as a result of the Brexit referendum outcome in 2016. In fact, UK households have helped economic growth where businesses otherwise would have, as firms have decreased their investment since the EU vote, with government austerity continuing and the trade deficit widening at the same time too.
Furthermore, spending has risen despite a fall in the pound as a result of the vote on leaving the EU. The fall led to a reduction in real incomes, which meant consumers had to either use their savings or borrow more in order to spend money.
Concerns over sustainability
Nevertheless, some experts have questioned the sustainability of this economic growth by consumers, especially in the next 12 months were the consequence of the UK leaving the EU remains unknown. A low savings ratio and record unsecured household debt is a worrying trend.
Net borrowing at all-time high
Another grave concern for experts regarding the UK’s economy is the fact that all parts of it: (businesses, government and households included) were net borrowers in the final quarter of 2018. That means that the UK has therefore been reliant on foreign capital, making it worth 4.6 per cent of national income, according to the data released by the ONS.
What are the predictions for 2019?
Economists foresee consumer growth to continue to expand over the next year, owing to growing wages across the country, and high employment rates. Both of which mean consumers are no longer as reliant on cheap credit in order to spend. Nevertheless, what will actually happen will largely be dependent on Brexit talks in the next coming months and how these end up developing.