UK consumers reining in spending on entertainment and leisure
May 31, 2008
British firms that depend on consumer spending have witnessed their profitability fall to a record low in a decade. This is another sign that the economic slowdown is worsening. Profitability at consumer-facing firms within the services sector that make up the major share of the UK economy fell to minus 39pc in the past three months. This fact was revealed in a survey of the Confederation of British Industry.
The value and volume of business of consumer-facing firms that includes everything from cinemas and gyms to bars and restaurants was weaker in the past three months since November 2001. CBI’s chief economic adviser Ian McCafferty stated: “Services sector companies are worried about their business prospects because consumers are reining in spending on entertainment, eating out and leisure, while professionals offering services like property, law and accountancy have witnessed their profits flatten off as costs continue to increase strongly.” The findings echo the latest the Chartered Institute for Purchasing and Supply research report into the sector that noticed services were almost stagnating in April.
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