Spending growth moderates

Although retail spending has come off the boil in the past couple of months, the consumer recovery is on the whole holding up reasonably well. Indeed, there are few signs that Brexit uncertainty is having much of an effect, with consumer confidence still at a relatively high level. That said, employment and pay growth have weakened, inflation is gradually rising and the fiscal squeeze is intensifying. So household spending is unlikely to grow quite as strongly this year as last, when it rose by 2.8% in real terms. We expect a 2.5% rise this year and next.