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Big spending spurs British economy

London, August 30, 2014

Big-spending Britons powered the economy in August as they became more confident about the recovery and their finances, though mixed house price data suggested the outlook for the property market was less clear-cut.

Consumer confidence figures beat expectations, rising in August to match a nine-year high hit in June - serving up a reminder of Britain's reliance on shoppers to drive its strong economic upturn.

According to mortgage lender Nationwide, house prices rose 0.8 per cent on the month in August, far outstripping forecasts for a 0.1 per cent increase and pushing the annual rate of growth to 11 per cent.

But a separate survey from data company Hometrack showed prices in England and Wales grew just 0.1 per cent for a second successive month in August, with London lagging behind.

Robert Gardner, Nationwide's chief economist, said the outlook for the housing market - described by Bank of England (BoE) governor Mark Carney as the No 1 domestic risk to Britain's economy - was highly uncertain.

But overall consumer demand was expected to have stayed strong with Fabrice Montagne, economist at Barclays, saying the confidence data pointed to improved retail sales figures for August.

"This month's consumer confidence print seems pretty solid, showing that the expected slowdown in activity will happen only gradually in the second half of 2014, hence providing support for our November interest rate increase call," he said.

BoE policymakers broke ranks over interest rates for the first time in three years this month, although the central bank dented expectations of a first interest rate rise this year by slashing forecasts for wage growth.

A poll of economists showed the BoE will raise interest rates from a record low of 0.5 per cent early next year.-Reuters




Tags: economy | UK | Spending |

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