Recession puts brake on extra family spending

FAMILIES are being cautious about spending more in the wake of the recession, according to a government survey. Expenditure increased by only about 1.5 per cent in real terms last year.

The report reveals that although average family expenditure on housing dropped by more than 5 per cent because of lower mortgage interest rates, spending on food, alcohol, tobacco and clothing increased. But the overall rise was only about 3.2 per cent.

'My best estimate is that in real terms, after taking inflation into account, there has been an increase of about 1.5 per cent in spending,' said John King, editor of Family Spending, which is compiled by the Central Statistical

Office.

The survey, which defines the 'basket of goods' used in the Retail Price Index, analysed the spending of a random sample of almost 7,000 households during 1993.

It found that in 1993 the average weekly expenditure per household was pounds 277 compared to pounds 272 the previous year. Average weekly gross household income was pounds 353, a pounds 10 increase on 1992 and a typical one-parent family with one child had pounds 153 a week to live on.

The biggest average bills for families were for food ( pounds 50), housing ( pounds 44.80), motoring and fares ( pounds 43.20), leisure goods and services ( pounds 38.80), household goods and services ( pounds 38.50), clothing and footwear ( pounds 17.40), fuel, light and power ( pounds 13.20), and alcohol ( pounds 11.90).

Inevitably, the survey revealed wide variations in spending between different income groups. The highest spent five times as much on beer and cider and more than 11 times as much on wines and spirits as the lowest.

The 10 per cent of households with the highest gross income spent pounds 89 a week on food compared to pounds 20.20 for the poorest group. But this represented 25 per cent of the latter's total expenditure while, for the former, food comprised only 14 per cent.

There were also many regional variations. Families in Northern Ireland headed the bread buying table, spending pounds 3.70 a week which was more than twice the amount in Greater London. But people in Northern Ireland spent less on coffee than any other region, with people in the South-west and the North buying the most.

Spending on cigarettes was highest in Scotland at pounds 7.60 a week and lowest in East Anglia at pounds 3.70. People in the North and the West Midlands spent most on cigars while Northern Irish households were the biggest buyers of pipe tobacco.

Two-thirds of households had a car or a van in 1993 and one in five had two vehicles, continuing a rise of about 4 per cent every five years.

Central heating has been installed in 83 per cent of homes, ownership of washing machines increased from 67 per cent in 1973 to 89 per cent in 1993 and the number of households with videos has risen from 30 per cent in 1985 to 73 per cent last year.

Family Spending, a report on the 1993 Family Expenditure Survey; Government Statistical Service; pounds 25.