Festive gloom for High Street as sales fall

Beleaguered retailers are suffering a “bleak festive period”, according to figures that add to the wider picture of economic woes after the Budget.

A survey by the Confederation of British Industry (CBI) showed that sales fell for the third consecutive month in December and that companies see no signs 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, it was revealed that the government’s borrowing so far this year has been £2 billion higher than expected at the time of the Budget.

The CBI retail survey found sales this month were “poor” for the time of year. This is 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 £25bn raid on employers’ national insurance. Businesses have warned that the tax increase will result in lower wages, fewer staff and higher prices.

CBI chief economist Martin Sartorius said: ‘Retailers have been through a gloomy festive period, with annual sales falling for the third month in a row.

‘Looking ahead, retailers expect sales to fall again in January. Businesses will be glad to see the end of a difficult 2024, but the new year will bring no relief. The measures announced in the Budget will increase business labor costs and consumer spending is expected to remain modest as income growth slows.’

ONS data for a previous period also presented a disappointing picture.

It said retail sales volumes rose less than expected, 0.2 percent in November, after falling 0.7 percent in October. And it revealed a sharp 2.6 percent drop in clothing store sales. “That will bring little festive 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 this week showed inflation has risen to an eight-month high of 2.6 percent. And the Bank of England said it expected growth to pause in the current quarter. quarter of the year.

Meanwhile, yesterday’s ONS public finance figures showed that while last month’s borrowing (the shortfall between public spending and tax revenue) was £11.2bn lower than expected, it was revised upwards with compared to previous months.

This meant that for the first eight months of the financial year, March to April, it amounted to £113.2 billion. This is £2bn more than forecast by the Office for Budget Responsibility in October.