Beleaguered retailers are suffering a ‘gloomy festive period’ according to figures that add to the broader picture of economic woe in the wake of the Budget.
A survey from the Confederation of British Industry (CBI) showed sales declined for the third month in a row in December and that firms see no sign of improvement in January. Separate retail data from the Office for National Statistics (ONS) also failed to lift spirits.
And in another setback for Chancellor Rachel Reeves, government borrowing for the year to date was revealed to be £2billion higher than expected at the time of the Budget.
The CBI’s retail survey found that sales this month were ‘poor’ for the time of year. That is a blow for the High Street during what is often described as a make-or-break season for many businesses in the run-up to Christmas.
The sector is already reeling from Labour’s £25billion raid on employer National Insurance. Firms have warned the tax hike will result in lower pay, fewer staff and higher prices.
CBI principal economist Martin Sartorius said: ‘Retailers have endured a gloomy festive period, with annual sales declining for a third consecutive month.
Gloom: The CBI’s retail survey found that sales this month were ‘poor’ for the time of year
‘Looking ahead, retailers expect sales to fall again in January. Firms will be glad to see the end of a difficult 2024, but the new year is not set to bring relief. Measures announced in the Budget will push up businesses’ employment costs, and consumer spending is expected to remain modest as income growth slows.’
ONS data covering an earlier period also painted a disappointing picture.
It said retail sales volumes rose by a smaller than expected 0.2 per cent in November, having fallen by 0.7 per cent in October. And it revealed a sharp 2.6 per cent drop in clothing store sales. ‘That will bring little festive cheer for retailers,’ said Alex Kerr, UK economist at Capital Economics.
Nick Stowe, chief executive of Monsoon Accessorize, which has 150 stores, told the BBC: ‘Consumer confidence is low. People are concerned about the economy.’ Figures earlier this week showed inflation has climbed to an eight-month high of 2.6 per cent. And the Bank of England said it expected growth to grind to a halt in the current fourth quarter of the year.
Meanwhile, yesterday’s ONS public finance figures showed that while borrowing last month – the shortfall between government spending and tax revenues– came in at a smaller than expected £11.2billion, it was revised up for previous months.
It meant that for the first eight months of the financial year, from March to April, it stands at £113.2billion. That is £2billion more than predicted by the Office for Budget Responsibility in October.
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