Submitted November 2011. The analysis in this paper is based on data available at the time of last revision, April 2012. National Accounts aggregates referenced may have been revised since that date.
Household Consumption through Recent Recessions*
Version of Record online: 12 JUN 2013
© 2013 The Authors Fiscal Studies © 2013 Institute for Fiscal Studies
Special Issue: Special Issue on the Microeconomic Consequences of the Great Recession
Volume 34, Issue 2, pages 203–229, June 2013
How to Cite
Crossley, T. F., Low, H. and O'Dea, C. (2013), Household Consumption through Recent Recessions. Fiscal Studies, 34: 203–229. doi: 10.1111/j.1475-5890.2013.12003.x
This research was co-funded by the IFS Retirement Saving Consortium, which comprises Age UK, Association of British Insurers, Department for Work and Pensions, Financial Services Authority, HM Treasury, Investment Management Association, Money Advice Service, National Association of Pension Funds, Partnership Pensions and the Pensions Corporation. Co-funding was also received from the ESRC-funded Centre for Microeconomic Analysis of Public Policy (CPP, reference RES-544-28-0001). Data from the Family Expenditure Survey, the Expenditure and Food Survey and the Living Costs and Food Survey are produced by the Office for National Statistics and are Crown Copyright. They are reproduced with the permission of the Controller of HMSO and the Queen's Printer for Scotland. This paper reflects the views of the authors and not those of the Institute for Fiscal Studies, which has no corporate views. Thanks to the representatives of the members of the IFS Retirement Saving Consortium and to Richard Blundell, Rowena Crawford, Carl Emmerson, Ian Preston, Gemma Tetlow and an anonymous referee for helpful comments. Any errors are the authors' own.
- Issue online: 12 JUN 2013
- Version of Record online: 12 JUN 2013
This paper examines trends in household consumption and saving behaviour in each of the last three recessions in the UK. The ‘Great Recession’ has been different from those that occurred in the 1980s and 1990s. It has been both deeper and longer, but also the composition of the cutbacks in consumption expenditures differs, with a greater reliance on cuts to nondurable expenditure than was seen in previous recessions, and the distributional pattern across individuals differs. The young have cut back expenditure more than the old, as have mortgage holders compared with renters. By contrast, the impact of the recession has been similar across education groups. We present evidence that suggests that two aspects of fiscal policy in the UK in 2008 and 2009 – the temporary reduction in the rate of VAT and a car scrappage scheme – had some success in encouraging households to increase durable purchases.