Snapshot reveals nation's spending habits

A snapshot of the nation's spending habits today showed the proportion of household outlay on housing, water and fuel reaching its highest level in almost 40 years.

The Office for National Statistics report, which forms part of its Social Trends survey, found spending in these areas accounted for 21% of total outgoings for 2008, up from 15% in 1970.

Another set of data showed that UK households saved less in the year than for 40 years - although more recent figures suggest the recession has renewed people's interest in stashing money for a rainy day.

As the proportion of household spending on housing and energy rose, food and non-alcoholic drink dropped from 21% in 1970 to 9% in 2008, according to the ONS.

A similar decrease occurred in clothing and footwear, which fell from 10% to 5% of spending.

The ONS said this was not necessarily because households were spending less on these items, but that other expenditure had risen more rapidly.

Alcoholic drinks and tobacco - which applies only to alcohol purchased to consume at home - represented the only category where the volume of expenditure had fallen from 1970 levels.

The changes have occurred as spending on services has outstripped outlay on goods over the last 40 years.

Between 1970 and 2008, the proportion of total household expenditure that went on services increased from 35% to 52%.

Meanwhile, spending on goods decreased from 66% to 46% in the same period.

Savings rates had fallen dramatically by 2008, with the proportion of resources allocated for savings at 1.7%.

This was the lowest level since 1970 and way below the 7.6% average across the period.

But the ONS said data for the first half of 2009 indicated that the ratio was rising again, reaching an average of 4.8%.

"Therefore it seems that households have reacted to the economic recession of 2008 by increasing the proportion of income they saved, a similar pattern to previous recessions," the statistics organisation said.