UK Household Spending Touches 6-Year Low in 2017

Household spending weakened to its lowest annual growth for six years in 2017 amid Brexit-spurred inflation, with borrowing soaring and family savings plunging to a record low.

According to the Office for National Statistics, economic growth slowed to 0.4 percent in the final three months of last year, down from 0.5 percent in the third quarter as weaker household spending took its toll.

The ONS revised upgrowth for the year as a whole to 1.8 percent from the initial estimate of 1.7 percent, but this was still the lowest since 2012.

It leaves the UK with the lowest growth among the G7 economies at the end of 2017 as it enters the final year of its membership of the European Union.

The quarterly national accounts data showed Britons turned to debt to support spending in the face of last year's surging inflation, which outstripped meager wage growth.

The proportion of total income saved by households dropped to 4.9 percent in 2017, its lowest level since records began in 1963, the ONS said.

Overall household spending dropped the previous year to 1.7 percent, which was the lowest annual growth since 2011, according to the ONS.

In the fourth quarter, the current account deficit shrank to £18.4 billion, or 3.6 percent of GDP, down from £19.2 billion in the previous three months.

Net trade – exports less imports – made its largest contribution to full-year growth since 2011, the ONS reported.

Economists said there would be some relief on the way this year for households as wages are expected to start rising faster than inflation, which should help maintain growth in 2018.

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