The pressures on consumers are mounting, with a weakening housing market now adding to the mix. And the drop in the official measure of retail sales in August suggests that consumers might finally be succumbing to these pressures – although other measures of sales are still holding up rather better. The prospect of next January’s VAT rise may help to support spending towards the end of this year. But we still think that, after a modest rise this year, consumer spending will do no better than stagnate in 2011 and 2012.
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