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Consumer spending contracted by -23.6% in the second quarter of 2020 – the sharpest decline on record.
Total Expenditure continued to decline falling to £248,995m in Q2 2020.
On an annual basis, consumer spending fell by -26.2% in Q2 compared with the same quarter in 2019.
Drivers of spending
Food & Non-Alcoholic beverages and Alcoholic Beverages were the only sectors that recorded an increase in spending by 3.5% and 2.9% respectively.
Restaurants & Hotels was the most adversely affected sector in Q2, registering a -89.4% contraction. Elsewhere, Clothing & Footwear (-38%), Furniture & Household Equipment (-24%), Health (-31.2%) and Recreation & Culture (-21.2%) all declined sharply on the previous quarter.
Gross Domestic Product
GDP fell by 19.8% in Q2 2020 from the previous quarter, revised up by 0.6 percentage points from the previous estimate – the largest quarterly contraction on record. This follows a quarterly decline of 2.5% in Q1.
Also, record falls were registered in the Services (-19.2%), Production (-16.3%) and Construction (-35.7%) output levels.
GDP is forecast to bounce back sharply in Q3, estimated rate of 14%. However, this could fall short if UK restrictions are tightened due to Covid-19 cases.
Notably, the sharp decline in consumer spending resulted in the households savings ratio increasing to the record high rate of 29.1% in Q2 2020, up from 9.6% in Q1 2020.
There was inequality in the those that were able to save for the future, with higher-income households more likely to be able to do so than those on a lower income.
Consumer spending falls to 40-year low
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