Fears for Christmas spending as pay falls in UK

Take-home pay fell last month, suggesting a slowdown in consumer spending this Christmas, according to a new report today.

The decline was 0.2%, although among service sector workers the figure was 0.4%, according to pay research firm VocaLink.

Richard Cooper, of VocaLink, said: “The VocaLink take home pay index has shown that salary growth has been modest throughout 2007, averaging just 3.5%.

“So far consumer spending has remained strong. However, with signs of a weaker housing market, falling consumer confidence and the decline in take-home pay growth, it will be very interesting to see if the trends that indicate a low-spend Christmas for consumers are substantiated.”

Douglas McWilliams, chief executive of cebr, the economics consultancy which analyses the take-home pay index for VocaLink, said: “The 2007 annual wage growth averages out at 0.7% lower than 2006 levels despite increases in interest rates, fuel prices and inflation of other costs of living throughout the year.”

Average take-home pay increased by 3.2% in November compared with 3.4% in October and 3.6% in July and August, according to the study.