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Weak pound pushes United Kingdom household spending growth to slowest since 2014

24 Août 2017

The Office for National Statistics (ONS) said the amount of money spent by British households grew by 0.1% in the second quarter, down from 0.4% for the first three months of the year.

United Kingdom gross domestic product growth remained among the lowest in Europe in the second quarter amid a slowdown in household spending and business investment.

Business investment was flat on the quarter compared to +0.6% in Q1, the weakest since Q4 2016, while household spending slipped back to 0.1% compared to last quarter's 0.4%, the lowest level since Q4 2014.

Sterling has fallen by around 15% on a trade-weighted since June 2016's vote to leave the European Union, pushing consumer price inflation to its highest in almost four years in May, and added to its losses after the latest data.

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United Kingdom economic growth has slowed sharply this year, with faster inflation squeezing households, undermining spending power.

But that growth relied heavily on robust consumer spending, which this year has come under increased pressure from rising inflation, as stores push up prices in response to sterling's sharp fall after the Brexit vote.

The Bank of England said earlier this month that it expected the economy to grow 1.6% this year - slower than it had previously forecast, but in line with the average expectation of economists polled by Reuters.

Business investment was reported as unchanged for the second quarter following a 0.6% gain the previous quarter which was below consensus expectations of a small gain.

Weak pound pushes United Kingdom household spending growth to slowest since 2014