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Consumer spending hits five year high, latest figures show

Visa Europe | Visa

3 min read Partner content

MPs welcome the latest consumer spending data as Visa Europe releases its UK Expenditure Index 

As temperatures have risen over the past few months so has consumer confidence, with the latest spending figures revealing the most recent quarter of 2014 to be the strongest in five years.

According to Visa Europe’s UK Expenditure Index, spending in June increased by 1.4% compared to the previous year, and rounded off the most consistent period of growth since the second quarter of 2010.

Hotels, restaurants and bars showed the most improvement on the year at 6.5%, with recreation and culture in second at 5.8%.

Online spending also performed well, rising by 6.6% over the same period, while face-to-face fell transactions by 0.2%.  

Sectors that saw a slight annual decline in expenditure included clothing and footwear (-0.9%) and food and drink (-1.6).

Newly elected Conservative MP and Treasury Committee member Chris Philp hailed the statistics as “a positive sign for the UK economy.”

He also gave his analysis of the figures, saying “the significant contribution of online expenditure, which saw a growth rate of +6.6% on the year, cannot be ignored and is certainly a clear catalyst for the overall growth seen in this quarter.

“The increase in online expenditure also more than compensates for the -0.2% decrease in face-to-face purchases and with the perpetual expansion of the online marketplace, it is likely that it will continue to do so.”

Shadow Business Minister, Toby Perkins also welcomed the news, but warned that Government policy could compromise future growth.

He said: “The growth in our retail sector is welcome, and it will be of little surprise that the growth in online retailing is a key factor in these figures. Improved sales figures are encouraging, and welcome as the recent budget made no concession to one of the key retail issues, that of Business Rates which seriously threaten the profitability of many of our retailers.

“I am also anxious that the announcement that 13 million families are set to be worse off as a result of changes to tax credits will have a negative impact on consumer confidence at this delicate time in the global financial context.

“Retail is not only crucial to our economy but to the health and vibrancy of our high streets, and there have been worrying signs that we are becoming overly reliant on consumer debt again, so whilst encouraging these figures shouldn’t give the government any cause for complacency.”

Also responding to the findings, Economist at Markit, said: “The latest Visa Europe: UK Expenditure Index pointed to a further solid rise in household spending in June, despite the rate of growth easing since May.

“Looking ahead, stronger underlying economic factors, such as reviving wage growth and rising consumer confidence, are likely to underpin a further increase in household spending as we head into the second half of 2015.”

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