- U.K. Consumer Spending Rises Slightly in 2Q
The high cost of goods in the United Kingdom has started weighing on consumer spending as household expenditure grew marginally in the second quarter.
Consumer spending climbed just 0.1 percent in the quarter, the weakest since 2014 and a further sign of how surge in prices is impacting household expenditure.
Experts attributed the slowdown to the continuous fall of the pound and surge in the cost of import goods. Also, the weak business investment and trade in the quarter weigh on economic growth — the economy expanded by 0.3 percent in the quarter. Making it the worst first half growth since 2012 and the weakest among the G7 nations that have reported so far.
The report reinforces the view the Brexit has started impacting investment decisions and forcing businesses to hold off on major projects as they strive to project the impact of negotiation on future investments.
Therefore, economists expect headwinds to increase as the U.K. seek to negotiate its exit from the European Union to weigh on growth and new investment.
An economist at Pantheon Macroeconomics in London, Samuel Tombs said: “We expect the economy to continue to struggle.”
He further stated, “We expect Brexit risk to increasingly bear down on business investment as the U.K.’s exit date draws nearer.”