Today we had news on how the UK economy did in the third quarter. We heard that the ONS, our beloved compiler of official statistics, did not change its mind and is still estimating that the economy grew by 0.4 per cent. But the latest data contained a devil, also called detail. It seems that for UK plc the struggling consumer is more important than ever.
In Q3, or so said the ONS, domestic demand surged 0.9 per cent. And of this jump, the household was the main driver, with household spending up 0.6 per cent, government spending rose 0.3 per cent, inventories were up 0.2 per cent. But what the UK needs is investment, but this rose by a miserly 0.2 per cent.
But the problem is that the household is indebted. Real wages are falling. The household can’t carry on spending.
Jeremy Cook, Chief Economist at WorldFirst, put it neatly: “The UK economy owes everything to the overstretched consumer.”
Meanwhile, Lloyds Bank has released figures that strike a worrying note.
In the monthly Ipsos MORI survey of over 2,000 bank account holders in the UK, those who said they felt positive about their personal finances in October fell by 3 percentage points, from 64 to 61 per cent. This measure is now at its lowest level since April 2015.
A big gap exists amongst different age groups, with 78 per cent of over 65s feeling positive about their personal financial situation, versus just 60 per cent of 18 to 24 year olds and 61 per cent of 25 to 34 year olds. Women (58 per cent) are also significantly less positive than men (64 per cent).