UK Consumer Spending Rebounds in July, Defying Slowdown Signs – Visa Report by Reuters

LONDON (Reuters) – British consumer spending saw a notable increase last month, according to a survey conducted by Visa UK, which contrasts with recent indicators showing that consumers have grown more cautious since the June referendum on leaving the European Union.

Data from Visa regarding credit and debit card usage revealed that consumer spending rose by 1.6 percent in July compared to the same month last year, a notable uptick from June’s 0.9 percent increase and marking the largest rise in three months.

When adjusted for seasonal variations, spending climbed by 1.1 percent, representing the strongest month-on-month growth since January, recovering from a 0.5 percent decline in June.

However, the monthly figures are subject to volatility. Over the last three months, the data indicate that consumers continue to approach spending with caution, according to Visa.

“July’s figures suggest that UK consumer spending is resilient despite ongoing uncertainties post-referendum, though the growth rates are lower than what we have observed in recent years,” remarked Kevin Jenkins, Visa’s managing director for Britain and Ireland.

Other studies have indicated that consumer spending, a vital component of the UK’s economy, has been sluggish since the Brexit vote.

Consumer confidence recorded its steepest decline since March 1990 last month, as per a widely monitored index from market research firm GfK. Additionally, British retailers reported their steepest sales drop in four years, even though most major retailers have not directly attributed this decrease to the outcomes of the June referendum.

Recently, the Bank of England revised its forecasts for household consumption downward, suggesting a slowdown in growth from 2.5 percent this year to just 1 percent in 2017 and 0.75 percent in 2018, as unemployment is projected to rise.

Moreover, the Bank reduced British interest rates to a historic low of 0.25 percent and introduced stimulus measures potentially worth up to £170 billion.