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British household spending highest since 2007, still below pre-crisis levels

[LONDON] British weekly household spending rose in 2014 to its highest since before the global financial downturn but remained below pre-crisis level, official data showed on Tuesday.

Households spent on average 531.30 pounds (S$1,121) per week last year, which was 1.4 per cent more than in 2013, adjusted for inflation.

The Office for National Statistics said average household spending was still below a peak of 538.70 pounds in 2007, but had recovered from a 10-year low of 507.40 pounds in 2012.

Households spent a fifth of their income on average in 2014 on housing, bills and home improvements at 158.30 pounds a week - although that understates the true cost, since it does not include rent funded by welfare payments and also covers households which own their home outright.

Transport was the second-biggest category at 14 per cent of household spending, partly due to an increase in purchases of new and second hand cars.

Consumers have been the main driver of Britain's economic recovery and are expected to underpin growth this year, as Britons benefit from a higher wages, zero inflation and record low interest rates.

Average weekly after-tax income improved in 2014, to reach its highest since 2008 at 653 pounds, the ONS said. And the rise in disposable income accelerated last year, growing by 4.6 per cent, up from a 0.5 per cent rise in 2013.

Most economists expect the Bank of England to raise interest rates in the second quarter of 2016, and there are some concerns that could curb household spending after years of ultra-cheap borrowing costs.