Sunny weather boosts UK consumer spending

Summer spending surge: British consumer spending saw a modest increase in August, driven by a rise in food and drink purchases during the summer weather, according to recent surveys. This uptick contributes to signs of steady economic growth in the latter half of 2024.

Turnaround in consumer spending

Barclays reported a 1.0 per cent year-on-year increase in consumer spending on its credit and debit cards for August, marking a turnaround from two months of decline.

Additionally, a survey by the British Retail Consortium revealed that shop spending also rose by 1.0 per cent compared to last year, the most significant rise since March.

Both surveys highlighted a notable increase in grocery spending, attributed to people enjoying barbecues and picnics during the warm weather.

These findings align with various consumer and business surveys indicating that the UK economy is expected to grow steadily in the latter half of the year, although at a slower rate compared to earlier in 2024 as the economy recovered from a mild recession.

Spending powers economic boost

Jack Meaning, Chief UK Economist at Barclays, said that the survey supports the view that consumer spending would increasingly drive economic growth, which had previously depended heavily on government spending.

"With rising real incomes and improving consumer confidence, combined with decreasing interest rates, consumers are expected to enhance their spending power," Meaning said.

The UK economy, which emerged from a brief recession in early 2024, is projected to grow by 1.25 per cent over the year, potentially outpacing France, Germany, and Italy. New Prime Minister Keir Starmer has pledged to aim for double this growth rate.

(With Reuters Inputs)