video Finance Videos

UK data: consumers caught as spending power drops

Friday, June 30, 2017 - 01:48

The steady drumbeat of UK data continues to roll; the latest growth numbers are unrevised but show household income shrinking again, meaning consumers in Brexit Britain are suffering their longest decline in spending power since the 1970s. Kate King reports.

▲ Hide Transcript

▶ View Transcript

Egg throwing in the English countryside. A bit of cheap fun - exactly what Brits are looking for these days. Official data out Friday showing consumers have suffered the longest decline in their spending power since the 1970s. Real household disposable income down 1.4 percent, falling for the third quarter in a row. SOUNDBITE (English) IG, MARKET ANALYST, CHRIS BEAUCHAMP SAYING: "This is an economy that's beginning to suffer from that lack of confidence that people talked about, really we're not sure what happens next. The election's not helped matters really. The sudden spike in sterling as well. That will help alleviate import price pressures but it won't help us if we're trying to be that export led economy." Consumers forced to act delicately, after being squeezed from all directions. Rising inflation, caused by the weakness of the pound, compounded by slowing wage growth. The figures confirming the UK economy grew by just 0.2% in the first quarter, the weakest performance in a year. Unwelcome news for the Bank of England which is watching for signs of a pickup in the economy as it hatches plans to raise interest rates for the first time in a decade. The aim of course - not to end up with egg on the face. SOUNDBITE (English) IG, MARKET ANALYST, CHRIS BEAUCHAMP SAYING: "Honestly I don't think we're anywhere near a hike from the Bank of England and again again I think it's the tone in this just sending a subtle signal to the markets that you shouldn't always bank on the Bank of England being permanently doveish." There is one theory, that Mark Carney might just be talking a big game. In order to push up the pound, and push prices down. But with Friday's data revealing Britons are saving the smallest proportion of their incomes than at any time on record The cracks are really starting to show.