Retail sales plummet as trade fears and taxes weigh on confidence
Retail sales dropped in March and are expected to fall further as low confidence worsens a decade-long decline in retail.
Sales volumes in the UK dropped “markedly” in the year to March, according to the CBI’s latest trading survey.
It was the sharpest drop since last July and marks the sixth consecutive months of decline, as well as the fifth consecutive month of double-digit drops.
“Firms across the retail and wholesale sectors reported that global trade tensions and the Autumn Budget are weighing on consumer and business confidence, which is leading to reduced demand,” principal economist at the CBI, Martin Sartorius, said.
The weak results are bad news for Chancellor Rachel Reeves, who will unveil the Government’s Spring Statement tomorrow, March 26.
“Tomorrow’s Spring Statement is likely to focus on the persistent challenges facing the UK economy, reinforcing the need for policies that boost businesses’ confidence to invest.
“Reforming business rates, supporting the British Business Bank’s Growth Guarantee Scheme, and properly resourcing the Growth and Skills Levy could support businesses’ investment plans and drive the government’s growth ambitions,” Sartorius added.
The CBI’s findings support a survey from KPMG, which found Brits are planning to cut back spending on everyday items.
The survey of 3,000 consumers also showed that a growing number of people said they felt financially insecure.
AJ Bell analysts have highlighted the twelve-month low for FTSE350 retailers, which have been “bogged down by worries over whether weak consumer confidence and dodgy weather will hit the top line and that increased costs from national insurance contributions, wages, utilities and raw materials could further dent the bottom line.”
The latest challenges for retail are compounding a problem that began with the financial crisis in 2008, according to the Centre for Retail Research (CRR).
The CRR expects 200,000 retail jobs to disappear next year, along with over 17,000 stores.