Consumer confidence to power 0.8% GDP growth in Q3

Monday, 21 October 2013 10:20

Figures out later this week are expected to show that the UK economy is growing at its fastest pace for three years.

The GDP figures for the third quarter will be published on Friday and according to the latest estimate from the National Institute of Economic and Social Research (NIESR) the economy is likely to have grown by 0.8 per cent in the three months to the end of September.

This builds on the growth of 0.3 per cent and 0.7 per cent seen in the first two quarters of 2013.

Two new surveys show that the growth is being helped by rising consumer confidence even though actual wages are continuing to decline with inflation at 2.7 per cent, outpacing annual wage growth at 0.7 per cent by almost four times.

The Lloyds Bank September Spending Power Report reached its highest ever level since it began in November 2010, showing increased confidence in the housing market and less fear of unemployment.

However, there was a rise in the number of people concerned about energy prices, as the third of the “big six” energy suppliers, nPower follow SSE and British Gas in announcing price increases.

Meanwhile, Deloitte’s consumer tracker survey saw its strongest reading since it began in 2011, again helped by increased optimism in the housing market.

Ian Stewart, chief economist at Deloitte, said: “Overall confidence is growing and has been for the past year.

“Less downward pressure on incomes, combined with renewed economic optimism and an improving housing market make for a story of gradually recovering confidence – notwithstanding the fact that the level of real incomes is continuing to fall.”


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