The slow decline of the British consumer in 5 charts – and why it's set to get worse

The British consumer has been hit hard to Brexit as rising inflation makes spending more difficult.
Some analysts argue that the worst of the slowdown may be over as inflation comes close to its peak.
Deutsche Bank's Oliver Harvey disagrees, providing charts to show that more weakness is on its way.

LONDON — Since Britain voted to leave the European Union last June, the country's economic fortunes have taken a turn for the worse.

leaving the UK languishing as the slowest growing economy in the G7

First up, the number of new cars being bought is close to lows last seen in 2011.

"Car purchases make up 30% of all transport spending, so monthly data on new vehicle registrations do a good job of predicting transport spending. After collapsing to recession levels earlier this year, registrations remain well below long term averages," Harvey writes.

When that initial drop came earlier in the year, changes in the way cars are taxed were cited as a potential reason, but Harvey suggests that the lack of any real bounce in the figures as the year progresses suggests that this may not be the case.

Sales of household goods remain subdued.

Harvey notes that Deutsche tracks two key indicators of household spending on goods and services. First is retail sales volumes tracked on a monthly basis, the chart of which can be seen above.

As do sales of bigger ticket items like furniture and televisions.

The second is sales at high street stalwart John Lewis, which is a key provider of bigger ticket items like sofas, wardrobes, and TVs.

"Both imply a further slowdown," in the near future, Harvey writes.

Next up, overseas tourism by Brits, which despite making up a relatively small part of spending, tends to track broader trends well.

"UK tourist spending has tended to be well correlated to overall consumption, although it only makes up a small amount of overall demand. Monthly data on UK visits overseas track this well. Visits abroad have slowed much less than after the 2008 crisis, despite the weakness in the exchange rate, but are tracking lower," Harvey says.

All in all the indicators are pointing in the same direction — more GDP weakness.

"In sum, out of the five high frequency indicators we like to track, four remain weak. A composite indicator of year over year spending suggests a further slowdown in household spending Q3," he concludes.