Unprecedented fall in spending by households

Household spending in Britain has fallen at an unprecedented rate over the past three years, an economic study claimed today.

In an analysis of the last recession, the Institute of Fiscal Studies (IFS) also said there were marked changes in the areas people cut back on compared with previous economic downturns.

Household expenditure fell by five per cent in real terms between 2008 and the first quarter of 2009, when Britain was last officially in recession, but unlike the previous two downturns, in 1980-81 and 1990-91, spending has still not recovered to its pre-recession levels.

Hide Ad
Hide Ad

Food purchases were significantly lower in the last recession due to higher food prices, along with lower spending on holidays, alcohol and eating out.

Consumer durables expenditure, though, was little changed, something which the IFS attributes to the temporary cut in VAT and the vehicle scrappage scheme introduced by the last government.

Related topics: