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les, boats or aircraft and also licences to hunt, shoot or fish

ü Subscriptions, contributions and dues paid by households to NPISHs, like trade unions, professional societies, consumers'associations, churches and social, cultural, recreational and sports clubs

ü Voluntary transfers in cash or in kind by households to charities, relief and aid organisations

Consumer expenditure is determined by many factors. Some of the most important are:

ü Disposable income: Disposable income can be determined by taxes, wages and living costs. For example, a cut in VAT should increase disposable incomes and encourage spending. Rise in living costs not matched by wages would cause a fall in consumer expenditure

ü Interest rates: Lower interest rates reduce mortgage interest payments increasing disposable income. Lower interest rates also make it cheaper to borrow and give less incentive to save therefore encouraging spending. Some savers may have less income because interest rates are lower, but, in the UK lower rates have a bigger effect on borrowers than savers.

ü Confidence about future: If consumers have low confidence e.g. fears unemployment they will spend less now and save. This explains why interest rates low in 2009, have not encouraged spending. People fear unemployment so they prefer to save rather than spend.

ü House prices: When house prices are rising, people feel wealthier and are more confident to spend. When house prices rises people can also take part in equity withdrawal which is where they remortgage to be able to spend more

ü Inflation / Deflation: If there is deflation, people know that prices will be cheaper in the future, therefore this often causes people to delay spending and buy goods later this can cause a fall in consumer expenditure.

ü Availability of Credit: If banks are reluctant to give loans for buying a car, spending on these big items decreases.

Analysis of Consumption Expenditure

The Consumption Expenditure in UK has grown from $ 280 Billion to $ 1135 Billion from 1948 to 2008 with a constant annual growth rate (CAGR) of 2.36%, over the period of 60 years. The total consumption expenditure has almost become five times in real term from 1948 to 2008. The graphic also shows the division of consumption expenditure among Final household expenditure, Final consumption expenditure of NPISHs and Final consumption expenditure by government. Household final consumption expenditure amounts to nearly 70% of the total consumption expenditure and forms the most important part of the Consumption expenditure.

Further analysis of the Y-o-Y growth of the consumption expenditure shows how over the years there have been vast changes in the year-on-year growth rate based on the macroeconomic policies of the government and external environmental factors. These periods of deep recessions and booming growth have been explained later in the paper along with policies that affected the growth.

The consumption expenditure also forms the most crucial aspect of the GDP and its growth rate and almost amounts to 90% of the total GDP. However, this ratio has constantly decreased from as high as 98% in 1952 to just 82% in 2008. Household consumption has provided a firm contribution to UK growth over the recent years and, together with government consumption