British Consumer Spending Increases Modestly in August

(Reuters) – British consumer spending increased modestly in annual terms during August, fueled by spending on food and drink during summery weather, according to surveys on Tuesday that added to signs of steady economic growth in the second half of 2024.

Barclays reported that consumer spending on its credit and debit cards rose by 1.0% year-on-year in August, reversing two months of decline.

A separate survey from the British Retail Consortium also indicated that spending in shops increased by 1.0% in annual terms in August, marking the strongest uptick since March.

Both surveys highlighted a surge in grocery spending, attributed to consumers enjoying barbecues and picnics during the warm weather.

These reports align with various consumer and business surveys suggesting that Britain’s economy will expand at a solid pace through the second half of the year, although it may slow from the rates seen earlier, following a brief recession.

Jack Meaning, chief UK economist at Barclays, stated that the survey supports the view that consumers would increasingly bolster the economy, which had previously relied heavily on government spending for growth.

“Growing real incomes and strengthening consumer confidence should combine with falling interest rates to allow consumers to utilize their spending power more effectively,” Meaning added.

Britain’s economy emerged in early 2024 from a brief and shallow recession in the second half of the previous year, and the Bank of England expects it to grow by 1.25% over 2024, potentially outpacing France, Germany, and Italy.

New Prime Minister Keir Starmer has stated his goal of doubling that pace of economic growth.