Festive gloom for the High Street as sales slump
Beleaguered retailers are facing a ‘gloomy festive season’, according to figures adding to the wider picture of economic woes in the wake of the Budget.
A survey by the Confederation of British Industry (CBI) found that sales fell for the third month in a row in December, with businesses showing no sign of improvement in January. Separate retail sales data from the Office for National Statistics (ONS) also failed to lift spirits.
And in a further setback for Chancellor Rachel Reeves, it emerged that government borrowing for the year to date was £2 billion higher than expected at the time of the Budget.
The CBI’s retail survey showed that sales this month were ‘poor’ for the time of year. That’s a blow to 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 £25 billion raid on employers’ National Insurance. Businesses have warned that the tax increase will result in lower wages, fewer workers and higher prices.
CBI chief economist Martin Sartorius said: ‘Retailers have had a bleak festive period, with annual sales falling for the third month in a row.
Gloom: CBI’s retail survey found sales this month were ‘poor’ for the time of year
‘Looking ahead, retailers expect turnover to decline again in January. Companies will welcome the end of a difficult 2024, but the new year will bring no relief. The measures announced in the budget will increase corporate labor costs, and consumer spending is expected to remain modest as income growth slows.”
ONS data from an earlier period also showed a disappointing picture.
According to the report, retail sales rose a less than expected 0.2 percent in November after falling 0.7 percent in October. And it revealed a sharp 2.6 percent decline in clothing store sales. “That won’t bring much cheer to retailers,” said Alex Kerr, British economist at Capital Economics.
Nick Stowe, chief executive of Monsoon Accessorize, which has 150 stores, told the BBC: ‘Consumer confidence is low. People are worried about the economy.” Figures from earlier this week showed inflation rose to an eight-month high of 2.6 percent. And the Bank of England said it expected growth to come to a standstill in the current fourth quarter of the year.
Meanwhile, yesterday’s ONS public finance figures showed that although last month’s borrowing – the shortfall between government spending and tax revenue – came in at a smaller than expected £11.2 billion, it was revised upwards on previous months .
It meant that for the first eight months of the financial year, March to April, it amounted to £113.2 billion. That is £2 billion more than forecast by the Office for Budget Responsibility in October.
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