Fitful recovery continues (Nov 10)

Consumer spending is still recovering, but the improvement remains fitful. Spending should receive some support in the last few weeks of the year from consumers bringing forward spending ahead of the VAT rise (although some firms may have already raised prices in anticipation of the tax hike). But that will only store up weakness for the start of 2011 – with the first quarter of next year perhaps the most vulnerable to a renewed fall in both consumer spending and overall GDP. We still expect consumer spending to fall in 2011 as a whole.