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expenditure, more than offset weak investment and external demand since the beginning of the 1990's.

Household Consumption Expenditure

Household Final Consumption Expenditure (HHFCE) can be defined as spending by households on products or services to satisfy their immediate needs or wants. This includes expenditure on the administrative costs of insurances but excludes capital expenditure on dwellings and valuables. The attached graphic (for year 2008) shows the proportion of the household consumption as part of the total consumption (72%), with Government Final Expenditure around 25% and Consumption Expenditure of NPISHs just around 3%.

In real terms, that is, after allowing for inflation, household expenditure has increased most years over the past 45 years or so. Years when household expenditure showed less than buoyant growth are linked to periods of recession and downturns in the economic cycle. Despite the occasional blip, long-term growth has been remarkably steady: total household expenditure in real terms in 2008, was just over five times the equivalent in 1951. The analysis of the data over the period of years shows the growth of the household consumption expenditure as the part of the total consumption expenditure. The attached graphic shows the growth of household consumption on the primary axis and percentage of Household Consumption as part of total consumption expenditure on secondary axis.

The household consumption expenditure is divided into divisions by the Classification of Individual Consumption by Purpose (COICOP) to conform to the European System of Accounts 1995.

These divisions are:

ü Food and non-alcoholic beverages

ü Alcoholic beverages and tobacco

ü Clothing and footwear

ü Housing, water, electricity, gas and other fuels

ü Furnishings, household equipment and routine household maintenance

ü Health

ü Transport

ü Communication

ü Recreation and culture

ü Education

ü Restaurants and hotels, and

ü Miscellaneous goods and services

The expenditure on the housing sector forms the major expenditure for the households, followed by transport and miscellaneous goods and services. The attached graphic shows the breakup of the household consumption among its top six constituents. It graph also shows that the growth rate in the miscellaneous good and services has been the highest and its proportion of the total household expenditure has become more significant.

There are various behavioural, social and environmental factors that have caused the change in the spending in certain sector and reflect in more detail how household and personal expenditure patterns are changing. Some of these social or environmental trends that have been observed are:

ü better transport links (such as the Channel Tunnel) and cheaper air fares have contributed to the growth in the tourist industry

ü greater proportion on spending on leisure items as compared to essential items

ü increasing popularity of eating out

ü Greater expenditure on recreation and household equipments, due to emergence of new products services

UK economy during 1971-1984

In order to understand the economy of UK