Retail sales fall as ‘suffocating’ Brexit uncertainty envelopes UK high streets
Retailers suffered a weak end to 2018 as Brexit uncertainty saw shoppers spending less in the face of Brexit uncertainty, the latest data shows today.
Sales fell 0.9 per cent month on month in December as shoppers kept their purses closed, the Office for National Statistics data revealed.
Read more: All the high street giants that collapsed in 2018
Trading fell in all retail sectors save food stores and petrol stations. Excluding those, sales fell a dramatic 1.3 per cent from November.
Meanwhile, growth for the whole of 2018 almost halved compared to 2016’s 4.7 per cent peak in growth, falling to 2.7 per cent.
The three months to the end of December saw sales dip 0.2 per cent compared to the same quarter last year.
Online retailers continued to eat into high street shops’ margins, accounting for 20 per cent of all retail sales in December, growing by 13.7 per cent compared to the end of 2017.
The Centre for Economics and Business Research blamed the “suffocating effect” of Brexit uncertainty for the subdued spending, which comes at a time when employment is at a record high.
Cebr economist Pablo Shah added: “These figures fall short of what was an already pessimistic consensus forecast, and ring further alarm bells for the high street.”
However, Pantheon Macroeconomics chief economist Samuel Tombs pointed out that the monthly decline comes after sales lifted in November thanks to a Black Friday boost.
“Looking through the volatility, however, it’s clear that retailers have had a tough start to the year,” he added, pointing to the quarterly drop of 0.2 per cent.
“It nonetheless suggests that consumers have tightened their purse strings amid rising concerns about Brexit.”
It comes after consumer spending surveys from Visa and Barclaycard suggest shoppers have slashed their monthly budgets.
Read more: UK consumers feel the pinch in the face of Brexit uncertainty
But Toombs suggested the outlook for 2019 could become more positive.
“Looking ahead, retail sales could be picking up quickly later this year, given that households’ real incomes will be boosted by a further fall in inflation and significant increases in income tax thresholds in April,” he said, “while confidence should recover when politicians finally have found a way to avert a no-deal Brexit.”