The new year got off to a very weak start. Admittedly, temporary factors played some part in this. Not only did the snow discourage spending, but consumers may have pulled forward purchases of bigticket items to the end of last year in order to beat the VAT rise. That said, any bounce-back in spending is likely to be short-lived. The wider economy only just pulled out of recession at the end of last year and the labour market already appears to be relapsing. The housing market recovery still appears to have some momentum, but the cracks are showing even there. Overall, we continue to think that overall real consumer spending will struggle to rise at all this year.
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