Recent data from the British Retail Consortium (BRC) and Opinium indicates a significant decline in UK consumer confidence as 2024 concludes, with public sentiment regarding the economy reaching new lows.
In December, consumer expectations for the UK’s economic state over the next three months fell sharply to -27, down from -19 in November.
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Helen Dickinson, Chief Executive of the BRC, noted, “Public confidence in the state of the economy took a nosedive, falling 8 points to -27.” This decline highlights growing public concern about the nation’s economic trajectory.
Spending intentions decrease
The data also reveals a downturn in consumer spending intentions. Personal spending on retail dropped to -3 in December from +3 in November, while overall personal spending decreased to +11 from +17.
Dickinson commented, “The public’s spending intentions – both in retail and beyond – dropped 6 points, with expectations of spending in nearly every retail category falling.”
This trend suggests that retailers may face a “New Year spending squeeze” as they launch January sales.
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By GlobalDataRetail sector faces challenges ahead
The BRC warns that declining consumer confidence, coupled with anticipated cost increases, could lead to a challenging year for retailers. The industry is expected to encounter approximately £7 billion in new costs from the upcoming Budget in 2025.
Dickinson cautioned, “Retailers will have no choice but to raise prices or cut costs – closing stores and freezing recruitment.” She urged the government to ensure that proposed business rates reform does not result in higher rates for shops.
This sentiment is echoed by industry leaders who have expressed concerns over the Budget’s impact. A letter signed by 79 major retailers, including Tesco and Marks & Spencer, warned that the Budget’s measures could add £7 billion in annual costs, exacerbating inflation and affecting employment.
They have requested a meeting with the Chancellor to discuss potential solutions.
As the UK retail sector prepares for 2025, it faces a complex landscape of subdued consumer confidence and significant financial challenges.
The interplay between consumer sentiment and policy decisions will be crucial in shaping the industry’s trajectory in the coming year.
