Slow spending growth predicted
The Centre for Economics and Business Research (CEBR) expects that households will focus on building up savings as they guard against weak pay growth, high unemployment and continued Government austerity.
It is predicting that consumer spending per household will rise by just 1.8% in the period between now and 2018, having fallen 7.1% since 2003.
CEBR's head of macroeconomics Charles Davis said: "Households have had to get used to living within their means as they have been buffeted by the financial crisis, weak economic growth, fiscal tightening and high inflation.
The savings ratio is expected to hold steady at around the 7% mark until 2018 - a level more than three times higher than in 2008.
Over the years from 2002 to 2007 real consumer spending per household rose by 10.4% as the economy performed robustly, the CEBR said.
Rapid real wage increases and low unemployment meant consumers were happy to spend freely and use borrowing extensively as unsecured lending increased from £150 billion to £193 billion alongside large increases in secured borrowing.
Over those five years the savings ratio declined from 5.1% to 1.7% as households saved less of their income to fund consumption increases.
The median household's real spending power is down by 5.1% since the financial crisis as a result of weak pay growth, high unemployment, elevated inflation and Government fiscal austerity, it added.
© 2013 Press Association