U.K. Consumers Push Back Against Drag From European Weakness

British exporters are taking a knock from the sluggishness of the euro area, leaving consumers fueling much of the fire behind the expansion. Households ramped up spending in stores at the fastest pace in more than a decade in the fourth quarter, and data Tuesday will show how much that checked the impact of weak external demand. Economists forecast growth of 0.6 percent in the three months, down from 0.7 percent in the third quarter. While the buildup to the general election in less than four months may weigh on confidence, further stimulus may reverse the cooling trend. The European Central Bank will pump $1.3 trillion into the economy of Britain’s biggest trading partner, while a slump in oil prices and strengthening wage growth are handing Britons the spending power they’ve been missing for years. “Growth is pulling back but the recovery hasn’t stumbled,” said Victoria Clarke, an economist at Investec Securities in London. “We’re expecting an improvement in Europe and oil might mean a big boost to consumer spending, with more to come from what we’ve already seen.” Forecasts for the fourth quarter in the Bloomberg survey range from 0.5 percent to 0.8 percent growth. For the full year, gross domestic product probably rose 2.6 percent, according to a separate poll. The outlook prompted Martin Weale, a member of the Monetary Policy Committee at the... Read More The Office for National Statistics will publish the estimate for the quarter, which is based on about 44 percent of the data that will become available, at 9:30 a.m. tomorrow. Three days later, the Bank of England will publish data on mortgage lending and consumer credit for December. “For the U.K., the best thing the ECB could have done is exactly what they did,” said Rob Wood, an economist at Berenberg Bank in London and a former BOE official. “A stronger euro-zone economy should feed through to the U.K. and make rate hikes a more reasonable proposition.” To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net