The near-term outlook for the consumer recovery has weakened since the UK voted to leave the EU last month. Indeed, consumers’ confidence in the economic outlook deteriorated sharply, and the drop in the pound is set to eat into real income growth over the next couple of years. That said, we don’t think that consumer spending is on the verge of a sharp slowdown. Confidence remains at a fairly strong level by past standards, interest rates are set to remain lower for longer and will probably be cut further soon, and the jobs market is in a healthy position. Accordingly, we expect consumer spending growth to slow from 2.6% in 2015 to 2.4% this year, and to 1.5% next year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services