Business

Bills - and spending on leisure - on the up, survey finds

Housing and utility bills are expected to account for more than a quarter of spending in five years
Housing and utility bills are expected to account for more than a quarter of spending in five years Housing and utility bills are expected to account for more than a quarter of spending in five years

PAYING for housing and utility bills will make up a quarter of all consumer spending within five years, according to the latest economic outlook by PwC.

Overall, the projections suggest an annual real increase of around 3.5 per cent in housing and utility costs between now and 2020.

But the business advisory firm's chief economist in Northern Ireland said families in the north could be disproportionately affected.

Dr Birnie said: “Northern Ireland average wages are around 85 per cent of the UK average, so local households will spend proportionately more on housing and utilities.

“A recent report from CEBR found that Northern Ireland has the highest percentage of UK workers on the minimum wage and that households here also spend more on essentials such as petrol, food and energy.

“So, while low interest rates, falling oil prices and an improvement in real wages have contributed towards some growth in household disposable incomes, the overall impact of an annual 3.5 per cent increase in housing and utility costs will be unwelcome.”

However, PwC also suggest that people are likely to spend more on leisure-related activities by 2020.

Meanwhile, spending on essentials such as food and clothing is expected to decline.

Real household spending is expected to grow by around 2.9 per cent in 2015 and 2.7 cent in 2016, but this could then slow down to an average of around 2.3 per cent per annum in the 2017-2020 period, PwC said.

The firm also projected that Northern Ireland would deliver the lowest economic growth of 12 UK regions this year at 1.6 per cent.

Esmond Birnie said that, looking ahead, the outlook analysis suggests that real income growth will pick up further in 2015-16, but may then moderate as jobs growth slows and further real terms benefit cuts take effect.

“With limited scope for further reductions in household savings ratios from already low levels, this is likely to cause either a reduction in consumer spending growth in the medium term, or a potentially unsustainable build-up in household debt," he said.

“The autumn statement later this month is likely to confirm plans for further fiscal tightening, despite some softening of planned tax credit cuts.

“The impact on Northern Ireland will remain challenging with some unprotected departments in Westminster already apparently having agreed cuts of up to 30% over the next four years.

“While an anticipated outcome to the current political impasse is widely expected, the Executive will need all the fiscal resources it can muster to help sustain the region through a slow and difficult recovery.”