U.K. Consumer Spending Barely Grows, Restraining Economy
U.K. consumer-spending growth slowed in the second quarter as car sales fell and business investment stagnated, holding back economic momentum.
The 0.1 percent increase in household expenditure was the weakest since 2014 and meant consumer activity added just 0.1 percentage point to gross domestic product. Business investment flatlined and net trade failed to contribute to growth for a second consecutive quarter. Car sales declined after a strong first quarter, when demand was boosted ahead of a tax change.
The economy grew 0.3 percent in the period, unrevised from an initial estimate. Over the first six months of the year, it recorded its weakest performance since 2012, and the Office for National Statistics said expansion has “slowed markedly.”
U.K. economic growth has slowed sharply this year, with faster inflation squeezing households, undermining spending power. Confidence among consumers and businesses is weakening amid slow progress in Brexit talks and as yet little clarity on the type of deal with U.K. will secure after it leaves the European Union.
While the dire predictions made before the referendum haven’t come to pass, the economy has entered a slower growth phase of about half the pace of the past four years. Economists surveyed by Bloomberg see expansion cooling to 1.5 percent this year and 1.3 percent in 2018, down from 1.8 percent in 2016.