Skip to main content

CEBR warns retailers they face SIX more years of stagnant consumer spending

High street shops already battered by the recession were today told their battle for survival would drag on for at least another six years.

Researchers for the Centre for Economic and Business Research forecast that households will focus on building up savings to guard against weak pay growth, high unemployment and continued Government austerity.

They warned consumer spending will grow as a ‘snail’s pace’ for almost the remainder of the decade.

Spending squeeze: Consumer spending is likely to be subdued for the next SIX years the CEBR says

The forecast comes just days after the Institute for Fiscal Studies said real wages had suffered their biggest ever fall in the five years since 2008.

It said a third of people had accepted a pay freeze since the start of the financial crisis in order to keep their job. Those lucky enough to receive a pay rise had seen it increase by around 2 per cent on average but many others had accepted employer imposed pay cuts rather than join the dole queue.

  More... Slump in wages over last five years is 'unprecedented' as workers have paid to hang on to their jobs, says think-tank Weather batters Britain's high streets again as retail sales fall at their fastest rate in over a year Nation's yearly pay shrinks by £52bn since the downturn as workers take a 7%-plus hit Do you prefer to shop online? See if you could earn cashback at the same time Save on your supermarket shop: The best rewards cards for cashback, points and perks

Meanwhile, inflation has been as high as 5.2 per cent in the last five years meaning anyone that has received a pay rise has more than likely seen it disappear in real terms as prices have risen. 

The CEBR said as a result of the economic environment consumer spending per household was likely to rise by just 1.8 per cent between now and 2018 having fallen 7.1 per cent since 2003.

The think tank's head of macroeconomics, Charles Davis, said: ‘Households have had to get used to living within their means as they have been buffeted by the financial crisis, weak economic growth, fiscal tightening and high inflation.

‘We think consumer spending will rise only slowly and a sustained recovery will be unable to rely on consumption.’

Continued lower consumer spending could have a disastrous impact on the wider economy as well as the high street.

The economy is almost 80 per cent reliant on the services sector - a large chunk of which consists of the retail industry.

Wage squeeze: Average earnings are growing at a lower rate than inflation

This year alone, several well-known high street names have gone to the wall including Jessops, HMV, Comet and Blockbusters.

But the forecast is also at odds with recent data which has shown the economy beginning to grow - albeit at a modest pace - amid signs of returning consumer and business confidence.

Last month official data showed the economy escaped the dire prospect of a triple dip recession in the first thee months of the year, growing by 0.3 per cent.

And the British Chambers of Commerce revised its forecast for the economic growth up from a previous estimate of 0.6 per cent to 0.9 per cent following a better than expected start to the year and rebound in the services sector.

It predicted the economy would grow by 1.9 per cent in 2014 compared to a previous estimate of 1.7 per cent and that in 2015 economic growth would by 2.4 per cent returning to levels not seen since before the financial crisis in 2008.

The CEBR said it expected people to continue to save more, at a rate of around 7 per cent of their household income until 2018 - a level more than three times higher than in 2008.

Over the years from 2002 to 2007 real consumer spending per household rose by 10.4 per cent, the CEBR said.

Closing down: recent high profile closures of some of Britain's biggest high street brands has pushed the number of empty shops on high streets to their highest ever level.

Rapid real wage increases and low unemployment meant consumers were happy to spend freely and use borrowing extensively as unsecured lending increased from £150billion to £193billion alongside large increases in secured borrowing.

Over those five years the savings ratio declined from 5.1 per cent to 1.7 per cent as households saved less of their income to fund consumption increases.

The median household's real spending power is down by 5.1 per cent since the financial crisis as a result of weak pay growth, high unemployment, elevated inflation and Government fiscal austerity, it added.



Popular posts from this blog

Study Abroad USA, College of Charleston, Popular Courses, Alumni

Thinking for Study Abroad USA. School of Charleston, the wonderful grounds is situated in the actual middle of a verifiable city - Charleston. Get snatched up by the wonderful and customary engineering, beautiful pathways, or look at the advanced steel and glass building which houses the School of Business. The grounds additionally gives students simple admittance to a few major tech organizations like Amazon's CreateSpace, Google, TwitPic, and so on. The school offers students nearby as well as off-grounds convenience going from completely outfitted home lobbies to memorable homes. It is prepared to offer different types of assistance and facilities like clubs, associations, sporting exercises, support administrations, etc. To put it plainly, the school grounds is rising with energy and there will never be a dull second for students at the College of Charleston. Concentrate on Abroad USA is improving and remunerating for your future. The energetic grounds likewise houses various

Best MBA Online Colleges in the USA

“Opportunities never open, instead we create them for us”. Beginning with this amazing saying, let’s unbox today’s knowledge. Love Business and marketing? Want to make a high-paid career in business administration? Well, if yes, then mate, we have got you something amazing to do!   We all imagine an effortless future with a cozy house and a laptop. Well, well! You can make this happen. Today, with this guide, we will be exploring some of the top-notch online MBA universities and institutes in the USA. Let’s get started! Why learn Online MBA from the USA? Access to More Options This online era has given a second chance to children who want to reflect on their careers while managing their hectic schedules. In this, the internet has played a very crucial in rejuvenating schools, institutes, and colleges to give the best education to students across the globe. Graduating with Less Debt Regular classes from high reputed institutes often charge heavy tuition fees. However onl

Sickening moment maskless 'Karen' COUGHS in the face of grocery store customer, then claims she doesn't have to wear a mask because she 'isn't sick'

A woman was captured on camera following a customer through a supermarket as she coughs on her after claiming she does not need a mask because she is not sick.  Video of the incident, which has garnered hundreds of thousands of views on Twitter alone, allegedly took place in a Su per Saver in Lincoln, Nebraska according to Twitter user @davenewworld_2. In it, an unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of the customer recording her. Scroll down for video An unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of a woman recording her A woman was captured on camera following a customer as she coughs on her in a supermarket without a mask on claiming she does not need one because she is not sick @chaiteabugz #karen #covid #karens #karensgonewild #karensalert #masks we were just wearing a mask at the store. ¿ o