By Philip Bunn and Jeanne Le Roux of the Bank’s Structural Economic Analysis Division, Robert Johnson of the Bank’s Risk Assessment Division and Michael McLeay of the Bank’s Monetary Assessment and Strategy Division.
A number of factors are likely to have restrained household spending growth over the recent past, including weak income growth, tight credit conditions, concerns about debt levels, the fiscal consolidation and uncertainty about future incomes. This article examines the factors affecting spending and saving decisions using the latest survey of households carried out for the Bank of England by NMG Consulting. Real incomes have been squeezed. Concerns about debt levels and tight credit conditions appear to be important factors supporting saving. But many households are also uncertain about their future incomes and have been affected by the fiscal consolidation. Over the next year, households do not expect to change the amount they save significantly, with the same factors that have supported saving recently continuing to be important.