Consumers face “tough time” during 2008

The Consumer and Housing Prospects report published this week by the centre for economics and business research (cebr) points to the likelihood of high rates of interest and low house price inflation stretching the finances of millions across the country.

In addition, the recent study from cebr forecasts a tough time for retailers during 2008, with consumer spending growth likely to fall to a little over two per cent as debt management becomes increasingly difficult for consumers.

Jaspreet Sehmi, one of the report’s authors and economist at cebr, said: “2008 will see house price inflation slowing to around two per cent, interest rates stuck above five per cent, a constrained government and a weak US economy.

“This all adds up to equal a tough time ahead for consumers and retailers.”

Many economic observers are now expecting the Bank of England’s monetary policy committee to raise the base rate of interest in Britain to 5.5 per cent when next it meets in May.