Extract A UK household consumption Despite the slow growth in real household disposable incomes, consumer spending rose in 2017. Annual spending per person increased by 589, when compared with 2016. This may have reected UK households' delay in adjusting to the increase in ination that was associated with the fall in the exchange rate of the British pound. The increase in consumption has also been driven by low interest rates. In 2017 UK house prices increased by an average of 5.1 %. UK consumers have financed most of their spending by borrowing on credit cards in order to maintain their living standards. in 2017 borrowing on credit cards rose by 9.6%, the second-highest level since before the financial crisis. This has increased the Bank of England's concerns about the sustainability of borrowing, given the slow growth in real incomes. The Bank has also indicated that the base interest rate was likely to rise faster than previously expected. More expensive credit could therefore constrain the ability of households to spend. (Source: adapted from 'ConsumerTrends UK'. ONS, https://www.ons.gov.uk/economy/ nationalaccounts/ satelliteaccounts/bulletins/consumertrends/octobertodecember2017 and Crown copyright 2018) 10 (c) With reference to Figure 2 and Extract A, explain two likely influences on the level of UK real household consumption. Ebillions 250 350 300 100 150 200 50 1997 1998 1999 2000 2001 2002 2003 Figure 2: UK real household consumption, quarterly, f billions, 1997 to 2018 Total UK real household consumption 2004 2005 2006 2007 (Source: adapted from ONS, www.ons.gov.uk/economyationalaccounts/satelliteaccounts/ 2008 2009 2010 2011 2012 2013 bulletins/consumertrends/apriltojune2018) 2014 2015 2016 2017 2018