UK households are the biggest spenders in Europe

Published at 00:01 AM on 13 December 2016

  • Christmas cheer for businesses in Europe, with growing household incomes and falling savings ratios
  • With anaemic GDP growth in the G7, now is a good time to provide a fiscal boost focused on investment

The UK has the highest level of household spending in Europe at an average of around £50,000 per annum, according to the latest Global Economy Watch from PwC. This compares to average household spending of around £41,000 in Ireland and £35,000 in France.

Household spending is influenced by a combination of disposable income and changes to savings. In the UK, around 50% of household spending is on ‘essential’ items such as housing, energy bills and food, but in France this rises to 60%. The main difference relates to food, which makes up 13% of total household spending in France, but just 8% in the UK.

What really matters for households and businesses is how much of household income is left over for spending on ‘non-essentials’ such as alcohol, eating out, holidays and entertainment. After deducting ‘essential’ spending, the UK continues to top the discretionary household income rankings at around £27,000 per annum.

Household savings in the UK are relatively low at 2% of an average household's disposable income, in comparison to other European countries such as France and Germany. While this is good news for businesses in the short term, it does make the UK potentially vulnerable to a sharp slowdown in household spending in the event of a future economic downturn that prompts higher precautionary saving, as happened in 2008-9.


Barret Kupelian, senior economist at PwC, said:

“As we approach Christmas, many consumer-focused businesses will be hoping for a bumper season of household spending. Discretionary disposable incomes grew for the first time since the crisis last year, suggesting real household spending power has only just started to recover.

“With gross disposable incomes up and the saving ratio down relative to last year in the UK, this could be a promising festive period for retail and consumer businesses, despite the Brexit vote.”

Growth in advanced economies continues to be anaemic, even with record low interest rates. In the G7, GDP growth in the third quarter of 2016 averaged 1.4%, year-on-year, compared to a long term growth rate of above 2% per annum.

Many policymakers are now re-focusing their attention on fiscal levers in a bid to stimulate growth. The UK Chancellor has already announced a £23bn “National Productivity Investment Fund” over the next five years, the Canadian government has pledged C$120bn of investment in infrastructure projects over the next 10 years and President-elect Trump has said he plans to invest in infrastructure and make changes to the US tax system.

The latest Global Economy Watch from PwC identifies three key reasons why fiscal stimulus focused on investment may be particularly beneficial in the present economic environment:

1)      Current and future government debt can be financed at relatively cheap rates

2)     Loose fiscal and monetary policy can reinforce each other

3)     Fiscal stimulus focused on investment can directly deliver longer-term productivity benefits

Barret Kupelian commented:

“The combination of cheap debt, expansionary monetary policy and the potential to boost productivity should be an irresistible call to action for G7 countries with fiscal space.

“With yields on 10-year government bonds still well below their long term averages, low interest rates increasing the fiscal multiplier and clear long-term gains from investing in infrastructure and R&D, the cards are stacked in favour of further fiscal stimulus focused on higher public investment.”

Improving productivity at a national level will ultimately benefit businesses across the economy. In the shorter term, businesses in regions where improvements are planned are likely to gain the most, while engineering and construction companies could benefit immediately from extra work on infrastructure improvements.


For a copy of the full report, or further information please contact Tilly Parke: [email protected] / +44 20 7804 8761



About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. © 2016 PwC. All rights reserved

« PwC comment on today's social care funding story | Homepage | UK House Price Index, December 2016 - PwC comments »

  • Contact us
  • +44 (0) 20 7213 1768

Specific and out of hours contacts