Timetric: UK Consumption as a Share of GDP

There is much talk in macro-economic policy circles of “re-balancing the economy” as a prelude to sustaining economic growth in the future. One aspect of this is addressing the long-term increase in importance of household spending as a share of national income (GDP). As our Timetric chart shows, the proportion of GDP accounted for by consumer spending on goods and services has edged higher over the years from 58% in 1980 to nearly two thirds of GDP in the credit-fuelled spending boom of the last few years.

Household spending as a share of GDP

Data from Timetric.

To view this graph, please install Adobe Flash Player.

Household final consumption expenditure (% of GDP), United Kingdom from Timetric

There are good reasons to expect a more subdued growth of demand in the next couple of years

* The squeeze on real disposable incomes
* Persistently high unemployment
* Continued weakness in property prices
* The high cost of unsecured consumer credit
* Low levels of consumer confidence

So perhaps the medium term trend in this chart will be downwards?

Data from Timetric.

To view this graph, please install Adobe Flash Player.

United Kingdom from Timetric