Jubilee boost short-lived

Although consumer spending appears to have boosted at the start of June by the extended bank holiday, the fillip did not last for long and the underlying trend in spending still looks pretty mediocre. At least consumers seem willing to spend when an occasion demands it and the Olympics may therefore provide another temporary boost. And the squeeze on real earnings is continuing to ease. However, the return to recession may soon knock the labour market and consumers may use any extra cash to pay off debt. Overall, we think that consumer spending probably has further to fall.