Figures published this morning showed that shoppers are reluctant to open their wallets, with retail sales falling 3.3% in November, in what the British Retail Consortium (BRC) called a “bad start to festive season”.
It certainly is. In November last year retail sales actually grew 2.6% (and the economy wasn’t exactly booming then).
This November is even worse with economic growth and confidence grinding to a halt since the election.
This threatens yet more bad news for our high streets as shoppers feel the pinch, or rather the Grinch. Because this slowdown is down to mistakes made by Keir Starmer, along with chancellor Rachel Reeves.
They destroyed confidence by talking down the economy straight after taking power, and threatening brutal tax raids in the October Budget.
Labour even appears to have sunk the e-commerce shopping boom, with online non-food sales crashing 10.3% in November.
BRC chief executive Helen Dickinson said this was “undoubtedly a bad start to the festive season… as low consumer confidence and rising energy bills have clearly dented non-food spending”.
Spending on fashion was particularly weak as households delayed purchases of new winter clothing.
In fact the only spending that did increase was on health, Dickinson said, “boosted by the season’s arrival of coughs and colds”.
Which is hardly something to celebrate.
Desperate retailers will be hoping for a better December, and are pinning their hopes on one factor.
Today’s figures do not include Black Friday, which took place at the end of the month on November 29. Last year’s November figures did include the annual promotional event.
Dickinson said if Black Friday disappoints too then “retailers will be feeling the squeeze from both sides as reduced revenues are met with huge additional costs next year”.
She’s referring to the Budget, which saw Reeves hike employers’ National Insurance (NI) contributions in a move that will cost them £25billion from next April.
The NI hike will cost retailers alone – who employ an awful lot of staff – £7billion extra next year. Dickenson warned this may trigger price rises and job losses, too.
Linda Ellett, UK head of consumer, retail and leisure at KPMG, said retailers will be hoping a successful Black Friday will “mitigate what is otherwise a disappointing month”.
If not, they may be forced to start Christmas sales even earlier to create some Christmas cheer.
The UK faces a bleak midwinter as the economy slows and the UK risks falling back into recession.
The worst is that this wasn’t necessary. The UK economy was going “gangbusters” at the start of the year, according to the Office for National Statistics.
It grew 0.7% in the first quarter and 0.5% in the second. But then GDP growth plunged to just 0.1% in Labour’s first three months in power, as Starmer and Reeves spread doom and gloom.
When their Budget tax hikes come into force, the nightmare is likely to intensify.
Separate research from Barclays confirmed the gloomy mood showing that spending on household essentials is falling at the fastest pace in five years.
Supermarket spend fell 1.8% last month, with spending on essentials such as groceries and fuel down 3.1%.
This was the steepest drop since 2019 when Barclays first started collecting data.
It said two thirds of people are looking for ways to reduce the cost of their weekly shop, amid growing concerns about the UK economy.
Barclays chief UK economist Jack Meaning, blamed falling consumer confidence since the summer as “expectations that post-Budget, inflation and interest rates will stay higher in the coming months”.
Merry Christmas everyone.