Shoppers out in force on Britain's high streets

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Written by Mark Burton
Know Your Money editor

The Office for National Statistics (ONS) has published data showing that year-on-year, consumer spending climbed 3.3 per cent in July, while over the three months to July, overall spending was up 1.4 per cent.

During this period, food sales showed particularly strong growth of 1.4 per cent, the biggest increase seen since 2007, while in the non-food sector, clothing sales were also robust, with the value of purchases rising 7.3 per cent year-on-year.

Britain's return to big spending

The figures have been welcomed by many commentators as a sign that consumer confidence is beginning to return, with shoppers considerably happier to get out their credit cards than was the case a year ago, when the UK was in the grip of both rising inflation and a constricting lack of credit.

Richard Lowe, head of retail and wholesale banking at Barclays Commercial Bank, said that Britons mood to splash the cash has not been dampened by the failure of the big barbecue summer promised by the Met Office to materialise, with the public heading to the high street in droves to snap up some seasonal bargains.

"Businesses in the clothing sector have successfully attracted the attention of the public, and high street promotional festivals have also brought shoppers through the door as they look for alternatives to a more costly day out with the family," he added.

However, Mr Lowe added that while it appears that the plummeting retail spending figures do appear to be have bottomed out and are now on the up, the rise in consumer spending has not been seen across all sectors, with DIY and home goods sales continuing to fall over the three months to July.

The ONS charted a 1.3 per cent decrease in sales volumes in the sector, with hardware stores bearing the brunt of the decline.

Mr Lowe commented: "Having brought their new clothes they've turned their attention outdoors instead of to equipping their homes. Household goods retailers will therefore be looking to the upcoming August bank holiday sales to catch the eye of the consumer."

This may make it an ideal time for shrewd shoppers planning a home makeover to make the most of some end-of-season bargains.

A summer fling or a long-term affair?

Although the signs of increased consumer spending is good cause for a collective sigh of relief from shop-owners and may provide encouragement for consumers hoping that the worst of the economic woes are behind them, Mr Lowe concluded by stating that it remains to be seen whether the spending spree was a short summer fling or whether the fire that drives Britain's love affair with shopping is stoked for the long term.

He explained that spending has received a big boost from foreign shoppers drawn to the UK by attractive exchange rates, while the miserable rate of exchange of sterling against the euro has encouraged Brits to take their summer break on home soil this year, keeping their hard-earned cash in the country in the process.

For this reason, consumers and businesses alike may be looking for more encouraging signs in the weeks to come that the UK could be pulling out of recession and back on the road to long-term recovery.

Getting Britain building

The ONS may once more provide a source in this regard, as the office has also today released the latest house-building figures for the UK, with the number of properties being built in the second quarter climbing an impressive 63 per cent on the first three months of the year.

With mortgage lending easing and the desire for housing back on the mend, developers got to work on 29,980 residential properties in the three months to June, figures showed.

However, the ONS was quick to point out that that this figure is still nine per cent lower than that seen in the second quarter of 2008, suggesting that while the UK economy may indeed be on the mend, it is important to remember that the road to recovery is likely to be longer than most would hope.

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