The UK consumer spending growth rate will be at its slowest in six years during 2019, ratcheting up pressure on retailers.
Spending will rise 1.6% over the year, according to the EY ITEM Club, which said consumer spending had benefited from an uptick in real earnings and employment growth during the second half of 2018 and early 2019, both of which now appear weaker.
“The improvement in purchasing power has meant that consumers have been significantly less affected in their spending decisions than businesses by uncertainties over the economy and Brexit,” said chief economic adviser to the forecaster Howard Archer.
“While consumer confidence in late 2018/early 2019 weakened to the lowest level since mid-2013, perceptions of personal finances and a willingness to spend generally held up much better than views of the economy.”
The ITEM Club said it believed real earnings growth had peaked early this year and would remain below that level for at least the rest of the year.
It predicts the labour market will diminish in strength over the coming months as businesses take their cues from prolonged Brexit uncertainty and a muted economy.
It forecast employment growth would drop from 1.2% in 2018 to 1% in 2019 and to 0.6% in 2020.