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UK consumer spending is forecast to grow at the slowest pace in six years, the latest EY ITEM Club special report on consumer spending, said Monday. Nonetheless, spending is seen continuing to outperform the economy as a whole.
The think tank forecast consumer spending to grow 1.6 percent in 2019, 1.7 percent in 2020. The economy is expected to log 1.3 percent growth and 1.5 percent expansion in 2019, 2020, respectively.
Although consumer spending was relatively unaffected by Brexit uncertainty, slowing labor market and earnings growth could bite.
According to EY ITEM Club, households' real disposable income is set to grow at slower pace in the next two years after 2018 spike and is likely to be significantly below the post-war average.
The labour market strength will increasingly fray over the coming months as companies tailor their behaviour to a lacklustre domestic economy, prolonged Brexit uncertainties, an unsettled domestic political situation and a challenging global environment, Howard Archer, chief economic advisor to the EY ITEM Club, said.
"As a result, we forecast employment growth to slow from 1.2 percent in 2018 to 1.0 percent in 2019 and 0.6 percent in 2020," Archer said.
