The spending of an average family went up by more than £1,000 last year, an official analysis said yesterday.
The Office for National Statistics said that family spending has now recovered from the recession with the typical household outlay at its highest level in more than a decade.
The breakdown of spending in the financial year that ended in March 2017 found that a typical home spent £554.20 a week, over £21 more than the year before, after adjusting for inflation.
The last time spending was at a similar level was in 2006, before the banking collapse and the downturn that followed it.
There were notable increases in the amounts that went to pay for foreign holidays, restaurants and hotels, leisure time and mobile phones
The extra spending was recorded ‘across the board’, the ONS reported, and there were notable increases in the amounts that went to pay for foreign holidays, restaurants and hotels, leisure time and mobile phones.
Officials said the reasons for the ‘significant’ spending increase included economic growth, record employment and inflation.
Inflation and low interest rates, its report said, have encouraged people to spend rather than save and given a further boost to economic growth.
The evidence that families feel free to push up their spending follows last week’s findings from the ONS that average household disposable income went up by £600 last year to £27,300, and that the gap between rich and poor has been narrowing.
Over the past decade, the income adjusted for inflation of the poorest fifth of homes has gone up by £1,800, but the richest fifth by only £200.
Yesterday’s spending figures also struck a further blow against ‘Project Fear’ predictions of economic disaster following a referendum vote for Brexit, including the forecast by the Treasury under former Chancellor George Osborne that a Brexit majority would cost every family £4,300.
However while the ONS housing costs include rent, mortgage interest payments, and maintenance costs, they have been skewed by a decision in the early 2000s by Tony Blair’s government to adopt EU methods of measuring household spending
Most of the 12-months that saw household spending recover to pre-recession levels came after the June 2016 referendum.
ONS analyst Robynne Davies said: ‘This is a significant change. We are confident that this is a true increase.
‘This is a return to levels last seen before the economic downturn.’
The biggest spending category for a typical home was transport, the ONS said, costing £79.70 a week, £5.60 up on the previous year.
This compared with £72.60 spent on housing, fuel and power, down by 10 pence on 2015/16 figures.
However while the ONS housing costs include rent, mortgage interest payments, and maintenance costs, they have been skewed by a decision in the early 2000s by Tony Blair’s government to adopt EU methods of measuring household spending.
Inflation and low interest rates, its report said, have encouraged people to spend rather than save and given a further boost to economic growth
When mortgage capital repayments, home improvements and council tax are counted in, weekly housing spending rises by £100 to £173, the ONS said.
Families were spending more on ‘recreation and culture’, up by £5 a week to £73.50.
The ONS report said much of the increase was a result of families ignoring the low level of sterling against the euro and other foreign currencies and plunging more of their money into foreign holidays.
Households spent an average of £25.50 a week on package holidays abroad, an increase of £4.70, or 23 per cent, over the year before.
People also spent more on their pets, up on average by 80 pence a week to £5.40
Restaurant and hotel weekly spending went up from £46.40 to top the £50 barrier at £50.10 in the year to spring 2017, the report said.
People also spent more on their pets, up on average by 80 pence a week to £5.40.
Spending was highest in London, with an average home laying out £644 a week averaged out over three years, just over the South East level of £632.
The lowest average spending over three years was in the North East, at £437.
Northern Ireland spending at £497 was higher than Scotland, £492 a week, or Wales, £459.
The ONS said: ‘Northern Ireland was the only country of the UK that had food and non-alcoholic drinks in its top three spending categories.
‘One reason for this is that the average Northern Ireland household size is larger than the UK average.
‘Cultural differences may also be a factor here, where households in Northern Ireland consider items such as good quality cuts of meat to be more of an essential food item compared with those in England.’
The spending levels were calculated from the ONS Living Costs and Food Survey which involves a detailed breakdown of the spending of more than 5,000 homes each year.