United Kingdom household spending stops growing.

United Kingdom (UK) households spend the biggest percentage of their weekly outlays on their homes. This spending pattern has not changed appreciably for the past five years.

These are two of the key findings from the UK's annual report on household spending. The report titled "Family Spending" is based on the Expenditure and Food Survey (EFS) for the financial year April 2003 to March 2004.

The report was prepared by the Office for National Statistics (ONS), and was released in early June 2005.

The chart above shows the growth in annual household expenditures (in 2003-2004 prices) from 1997 to 2004. And although spending patterns have remained fairly stable over much of the period, the growth in total expenditures themselves show wide variability.

Most interesting from this look at the growth pattern is that from a peak in 2001, household spending declined sharply and by March 2004 stopped growing altogether. In fact, a linear trendline drawn from these statistics would show a downward trend over the entire eight year period.

Matching the household expenditure growth statistics with annual GDP as forecast by the International Monetary Fund (IMF) requires comparing the previous year's GDP with the financial year depicted on the chart. So, for example, the prominent spike in household spending for 2001 is, in reality, echoing the decade high growth in GDP - 3.9 percent - posted for 2000.

Similarly, the steep decline in household expenditure growth after 2001 can be roughly paired with a decline in GDP in the succeeding early years of the decade.

With this in mind, growth in household spending has been much more sensitive to swings in GDP than is easily explained by discouraging economic news.

Add to this the fact that UK unemployment, quite high at the beginning of the decade, with the rate at the decade peak of 8.1 percent in 1996, has slowly but surely improved to the point where the IMF is forecasting the UK rate of unemployment will be 4.8 percent in 2005, the same as it was in 2004.

In reporting on the release of "Family Spending", the British Broadcasting Corporation (BBC) offered the opinion that since the most prominent expenses in the survey were those related to a family's home, being a "homebody" is a characteristic of the British consumer.

The trait was reinforced, said the BBC, by the fact that consumers spent more on in-home entertainment than they did on health club memberships, or other "healthy" activities.

While there is a certain logic to these observations, another explanation might be that the ups and downs of the UK economy, combined with European Union uncertainties, and the UK's participation in the war in Iraq, may speak more of a shock rather than a propensity to want to watch a lot of television. The unemployment statistics alone push thinking in this direction.

One footnote on "Family Spending" - for the first time the ONS surveyed children on their spending patterns. Spending for three age categories was presented.

Overall, children spent most of their money on food. The percentage of spending for snacks and school meals and other meals was identical (18 percent). Clothing was the next highest category with girls spending twice as much as boys.

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