September bounce in consumer spending lifts weaker Q3 growth

Consumer spending on cards rallied in September providing a strong end to an otherwise weaker quarter, according to Visa Europe’s UK Expenditure Index.

Card spending grew year-on-year for the fifth successive quarter, although the pace of expansion was the slowest of 2010 so far. The rate of growth at 7.9% for Q3 compared with a revised rate of 11.3% for Q2 and 8.4% for Q1.

According to the Index, a total of £87.6 billion was spent on the 91 million Visa debit, credit and prepaid cards in the UK compared against £82 billion in Q2 2010.

Total spending has recovered to pre-recession levels but the rate of growth is flattening out, indicating that consumer spending may not play a major role in the further recovery of the economy.

The continued rise of spending, however, points to sluggish growth rather than a double-dip recession.

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