We’ll find out shortly whether official statistics agree with economists surveyed by Bloomberg who say UK GDP probably shrank by 0.2 per cent in the second quarter. But at an uncomfortable moment when we know things can only get worse, looking backwards doesn’t help and nor does holding out hope for a miraculous ‘emergency budget’ in September. As for forecasting beyond that, it’s almost too scary to contemplate. Better to shun economists and politicians and focus instead on facts that tell us what’s happening now – such as data from Barclaycard – and things we can do keep our own budgets in balance.
Spending on ‘essential items’ was up by 7 per cent in July year-on-year, says the card company, but on utility bills by 44 per cent and on fuel by 30 per cent – a pretty good sketch of the state of inflation. The average supermarket transaction fell but the frequency of visits rose, as shoppers switched to ‘need-to-buy’ rather than fuller trolleys. Hospitality and travel showed a decline from June and three out of ten respondents say they aim to spend less on ‘social plans and days out’ – but 71 per cent, four points down from a year ago, are still confident they can live within their means.
So that’s where we stand on the downward slope – and here’s another clue. The Post Office handled a record £801 million of cash withdrawals in July, up 20 per cent from a year ago, as more people turn to cash as a budgeting tool – an interesting reflection on my argument (9 July) that the shift to cashless payment is itself an inflationary factor. In fact I’d urge everyone, especially the card-happy young, to switch to notes and coins so you know what’s left in your pocket.
And while I’m in the mode of Martin Lewis the ubiquitous ‘money-saving expert’, here’s another tip.