We as consumers spend over £1 trillion every year on goods and services, accounting for over 60% of the UK economy. What is this money spent on and how have patterns of consumption changed in recent decades?
The Office for National Statistics Consumer Trends release provides this information, showing how much has been spent on all kinds of different things ranging from bicycles to books, vegetables to veterinary services. We’ve delved into the data and picked out 10 interesting ways in which consumer spending in the UK has changed since 1985, the first year figures are available from this source.
Before we start, you should be aware that everything referred to in this blog refers to the total amount spent by consumers in the UK not average spending per household. Due simply to the UK’s population rising by 15% from 56.6 million in 1985 to 65.1 million in 2015, we would expect total spending to be higher. Finally, the purchase of property is not included in these figures (it counts as investment). Right, let’s go…
In 2015, the total amount spent on goods and services by consumers (that is individuals and not businesses or the public sector) was £1.15 trillion. That accounted for 61.4% of UK GDP and is up from £521 billion – or 59.7% of GDP – in 1985 in real (inflation-adjusted) terms.
To find out how the total amount of goods and services bought by individuals has changed over time, adjustments for changes in price are made. The result is a real-terms measure of spending, which gives us a better idea of changes in the actual amount of goods and services purchased.
The volume of consumer spending rose by 115% between 1985 and 2015. Strong growth was seen in the late 1980s until the early 1990s recession and from 1993 until the ‘Great Recession’ began in 2008. This period on the whole was marked by increasing household income. Consumer spending was stagnant in the aftermath of the 2008/09 recession, as average household incomes fell, before rising again from 2012.
2. Less of our spending is on food
In 1985, 11.3% of total consumer expenditure was on food (excluding food bought in restaurants), falling to 7.3% in 2015. This proportion gradually declined as growth in total spending (+115%) was faster than spending on food (+38%). £21 billion was spent on food in 2015.
3. Spending on tobacco has plummeted but alcohol is holding up
Unsurprisingly, with fewer people smoking, the amount of tobacco purchased has fallen sharply since 1985. Nevertheless, £19 billion was still spent on tobacco in 2015, accounting for 1.7% of all consumer expenditure (down from 2.8% in 1985). In contrast, the volume of spending on alcohol bought for home consumption (so not including pubs and bars) has gone up, tracking overall increases in consumer spending. There was a particularly large rise from 1995 to 2005 (+85%), although since then spending on alcohol has been flat.
There was a massive 383% increase in the volume of spending on tools for home improvements from 1985 to 2007 as DIY rose in popularity. Since the 2008/09 recession, and coinciding with a lower number of housing transactions, spending on DIY tools fell from £5.4 billion in 2007 to £4.0 billion in 2015 (inflation-adjusted figures in 2013 prices).
The volume of bicycles purchased has risen from £171 million in 1985 to £1.6 billion in 2015 (in fixed 2013 prices) – that’s a nine-fold increase. Most of this growth came, perhaps surprisingly, in the 1990s, with some further increases in the 2000s. However, expenditure on bikes since the late 2000s has remained fairly flat.
6. Spending on boat services now almost as high as on road services
Spending on road services – defined as transport by bus, coach or taxi – was more than five times that of sea and inland waterway services – passenger travel by ship, boat or ferry – in the mid-1980s (these categories exclude private car use and air travel).This large difference remained throughout the 1990s, but has narrowed considerably in the last decade. In 2015, expenditure on road services (£8.3 billion) was only slightly above that of sea services (£7.6 billion). This reflects a large decline of around 30% in the quantity of road services purchased since 2007 and strong growth in sea services since 2004.
7. Spending on toys and games surged in the 1990s
The amount spent on games, toys and hobbies (including computer games) increased sharply in the 1990s and early 2000s. Accounting for less than 1% of all consumer expenditure in the late 1980s, it rose to 2% by 2002. With the price of toys falling in this period – largely due to low-cost Chinese imports – the quantity of toys and games purchased rose by more than three-fold in the decade to 2004. Since then, expenditure on toys and games, in both cash terms and volume terms, has been fairly stable. (In 2015, £19.1 billion was spent on them.)
8. Personal care sector looking beautiful
The personal care market has shown strong growth over the past 30 years, with the volume of spending on it three times higher in 2015 than in 1985. Personal care includes hairdressers and beauty shops as well as toiletries, cosmetics and small electrical appliances such as razors and hairdryers.
9. The three acts of spending on books and newspapers: growth, stagnation and decline
Unsurprisingly, UK consumer spending on newspapers, books and stationery has been in decline in the past decade (this category also includes magazines, periodicals and greeting cards). From 1985 to 1995, expenditure on these items grew in line with total spending, but the next decade saw stagnation before the decline began after 2006.
10. Proportion of spending on restaurants has been steady over last 30 years
In 2015, consumers spent £77.1 billion on food and drink (including alcohol) from restaurants, pubs and cafes, just under 7% of total expenditure. This proportion has remained fairly constant over the past few decades, oscillating around the 7% mark, except for a slight dip following the 2008/09 recession.
Source and notes
All analysis is based on data from ONS, Consumer spending: trends: Quarter 2 (Apr to Jun) 2016, 30 September 2016 and associated time series data.
Consumer spending figures (including the UK total) include expenditure by tourists visiting the UK but excludes UK nationals’ tourist spending abroad.