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Equilibrium’s finance and investment news roundup

Our roundup this week includes a three-year low for household spending, an update on the cost of living, a worrying rise in identify theft and problems with the returning of new £1 coins. 

Slowest household spending growth in three years

The Office for National Statistics (ONS) has reported the slowest three-month rise in household spending since 2014, highlighting the UK as the slowest growing economy in the G7 so far this year. In the three months to June, spending grew by 0.1%, compared to 0.3% in the previous quarter.

The ONS said the slowdown is a reflection of “a deterioration of the economic position of consumers in the start of 2017”. A major factor in the fall was less spending on transport, which declined by 2.2%, as customers were buying more cars at the start of the year to avoid road tax changes that came into effect in April.

Retail sales also declined with the CBI’s monthly retail sales balance sliding to -10 in August from +22 last month - its lowest since July 2016. CBI economist Anna Leach said: “Despite the warmer weather at the start of the month, retail sales have cooled as higher inflation continues to squeeze consumers’ pockets.”

Consumer spending is a major driver of the UK economy, but has been put under pressure by inflation outpacing people’s wages.

Household bills are rising slower than the rate of inflation

New research of official data carried out by Money Saving Expert has revealed that the rise in the total cost of household bills was less than the inflation rate, indicating that the “cost of living squeeze” might not be as severe as previously thought.

The research found that costs, including rent, energy bills, council tax and insurance, have risen by 2.1% in the past year, which is in line with average earnings growth and lower than the 2.6% rise in the Consumer Prices Index (CPI) in July.

Although the research indicates only a small increase across household running costs as a whole, there has been significant increases to the price of electricity and insurance. Electricity bills rose by 9%, while the cost of insurance increased by 7.6% over the year, including a 12% increase in car insurance premiums.

Identity theft at “epidemic levels”

Identity theft in the UK has reached new levels, according to anti-fraud organisation Cifas, with people in their 30s the most targeted group. The fraud prevention group has recorded 89,000 cases of identify theft in the first six months of 2017 - a 5% rise compared to the same period last year.

Simon Dukes, Chief Executive of Cifas, said: “We have seen identity theft attempts increase year on year, now reaching epidemics levels, with identities being stolen at a rate of almost 500 a day. These frauds are taking place almost exclusively online. The vast amounts of personal data that is available either online or through data breaches is only making it easier for the fraudster.”

More than four in every five fraud cases were committed online, with many victims unaware that they had been targeted until they received a random bill or realised their credit rating has slumped.

Companies urged to “remain vigilant” when returning £1 coins

Attempts to phase out the old £1 coin are being hampered by businesses who are returning the new 12-sided replacement by mistake. One billion of the old coins have been taken out of circulation so far, but the removal process has been slowed down because about half of the £1 coins sent back are the new style, according to cash management company Vaultex.

Exchequer Secretary to HM Treasury, Andrew Jones, said: “There has been a fantastic effort from both the public and businesses in returning more than one billion old round pounds, and I thank everybody involved in this process so far. But there is more to do before the 15th October deadline.

“Businesses must remain vigilant when returning coins and ensure old and new coins are organised in separate packaging to make the sorting process quicker and easier.”

After 15th October 2017, businesses can refuse to accept the old £1 coin.