The latest Ernst & Young ITEM Club special report on consumer spending, released today, has indicated their expectations of an increase in consumer spend as confidence rises.
It was detailed that factors behind the confidence recovery are increases in the income tax personal allowance will see basic rate taxpayers taking home nearly £300 extra this year and a further £140 in 2014, thus increasing disposable incomes and building momentum. A strengthening economy, high levels of employment and a recovering housing market are also expected to boost confidence.
According to the report, ITEM expects that the upturn in consumer spending will gather momentum, with growth of 1.2% in 2013, 1.9% in 2014 and 2.2% in 2015. These are encouraging figures but ITEM also makes us aware in the report that they are still nowhere near the levels seen during the decade prior to the financial crisis.
Julie Carlyle, UK Head of Retail at Ernst & Young commented on what this means for the High Street:
“While a return to sustained growth in consumer spending must be seen as generally good news for the high street, the pattern of growth over the next few years raises two clear issues for the evolving retail sector. The first is that the increase in spending is expected to be strongest in areas like entertainment, leisure, broadband services and technology, indicating that the transformation of the high street towards leisure experiences will continue and that the battle intensifies for our £ spend. The second is that consumers’ spending will be affected by continuing caution following the downturn and greater divergence between different segments. This means all retailers will have to keep close tabs on their own consumers, by using analytics to generate deep insights from their customer data – and then acting quickly in response to emerging shifts.”
