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UK household spending falls yet further

Figures from the Office of National Statistics have confirmed the worst fears of many economists with UK household spending down by a significant 1.2% during the first three months of 2009, which is the largest drop since 1980. When you also consider that the economy fell by 1.9% over the same period and by 4.1% year-on-year and there are very few signs of the infamous "green shoots".

Slowly but surely the economists plan for the UK economy and forecasts for the short to medium term are falling. It was only UK government investment in the economy which avoided a steep fall in the first three months of 2009 and this is something which cannot go on forever. When you consider that manufacturing output fell by 5.5%, the construction industry fell by 2.4% and the critical services sector by another 1.2% this is not a good sign for the economy.

While the government has invested billions upon billions of pounds into the UK economy, to little avail at the moment, the really critical turning point will be consumer spending. Until we see a significant increase in consumer spending it is inconceivable that we will have a strong recovery in the economy even though there may be many more false dawns along the way.

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