Household spending “should raise red flags”
The average UK household spends £572.60 each week. This is the highest it has been since 2005, adjusting for inflation. Households may have been encouraged by rising wages and lower inflation, giving them more in their pockets.
Average weekly household spending was the highest in London and the South East (over £650), while spending in the North East was the lowest, approximately £200 less.
As might be expected, there was a notable difference between the spending among different age groups. Households with heads aged 50 to 74 years spent almost a quarter of their housing expenditure costs on alterations and improvements, while those headed by someone under 30 spent most on takeaway meals.
At the same time, households appear to be spending less in the pub. The average weekly spend on alcoholic drinks away from the home was less in the financial year ending 2018 (£8.00) compared with 10 years ago (£10.90), after adjusting for inflation. However, Londoners lead the charge, spending an average of £9.30 a week on alcohol away from home.
Ian Browne, retirement planning expert at Quilter said these figures should raise red flags, “particularly, since in 2017 UK households saw their outgoings surpass their income for the first time in 30 years and if spending habits haven’t changed then last year that unsettling trend is likely to continue.
“Cost of living is making up substantial amounts of this outgoing with transport, housing, fuel and power, food and non-alcoholic drinks making up 38% of average weekly spend. The nation is struggling under the weight of living costs, but we need to ensure that people don’t get stuck in a routine of spending all their earnings and are, where possible, setting money aside for tomorrow.”
Emma-Lou Montgomery, associate director for Fidelity International, said: “Household debt in the UK has been rising steadily over the last few years, largely due to cuts to benefit and limited wage growth affecting incomes. This has left some households relying on loans to cover basic, everyday living expenses.”
“The fact that inflation has fallen to its lowest level in nearly two years will offer some welcome relief to households struggling financially and market indications predict that 2019 households will get steadily richer. However, more still needs to be done in the new year to support struggling households and help them towards building up their long-term financial resilience. This is most crucial for women, who may fulfil primary care-giver roles and take career breaks which can result in a significantly reduced amount going into long-term savings, or none at all.”