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Consumer Spending Picks Up Defying Brexit Fears

Consumer spending rebounded in July, despite fears that the vote to leave the EU has dampened business and consumer confidence.

Customers spent 1.6% more in July than the year before, according to the Visa UK Spending Index which measures overall activity, not just card purchases.

Bars, restaurants and hotels were the main beneficiaries as an 8.9% increase in entertainment spending helped drive the recovery.

One pub chain told the survey that the Euros and July heatwave had helped drive business.

However, while spending increased from growth of 0.8% May and 0.9% June, it is still much lower than the average 2.4% increase in spending over the last two years.

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Kevin Jenkins, Visa (Xetra: A0NC7B - news) 's managing director in the UK and Ireland (Other OTC: IRLD - news) , said: "July's data suggests that UK consumer spending is holding up despite the ongoing uncertainty following the referendum, albeit at lower levels of growth than we've seen in the last couple of years.

"Looking at the last three months, the Index indicates that consumers remain cautious with their spending. Overall growth is hovering nearly one percentage point below the average seen over the past two years."

There has been a slew of consumer surveys warning the UK high street could be hit by a post-Brexit slowdown, including the closely watched gauge from market research company GfK (Swiss: GFK.SW - news) , which suggested confidence suffered its sharpest drop in 26 years .

Experts have cautioned the fall in the value of sterling could lead to price inflation , which will add further pressure to businesses trying to tempt shoppers to part with their cash.