As the new year unfolds, UK consumers are experiencing a notable decline in confidence regarding the nation's economic outlook. Recent data from the British Retail Consortium (BRC) reveals that consumer expectations for the economy over the next three months have plummeted to -34 in January, down from -27 in December.
This sentiment is particularly pronounced among older generations, with two-thirds of Boomers (ages 60-78) anticipating a downturn. In contrast, Gen Z (ages 18-27) remains the only demographic expecting economic improvement.
Helen Dickinson, Chief Executive of the BRC, commented on this trend, stating, "As the government warns of tough times ahead, it is little surprise that the public have caught the January blues."
She further noted that consumer confidence in the economy has reached a new low, with older generations exhibiting the most concern.
Impact on retail spending
The dip in consumer confidence is mirrored in spending behaviours. The BRC-Opinium survey indicates that personal spending on retail has decreased to -9 in January, a decline from -3 in December.
This reduction is partly attributed to the conclusion of the Christmas season, as individuals tighten their budgets for the year ahead. Dickinson observed that expectations of retail and overall spending have both fallen significantly.
This cautious approach to spending poses challenges for retailers, especially those in the non-food sectors, who are already grappling with reduced consumer expenditure and adverse weather conditions.
Retailers confront mounting costs
Compounding the issue, retailers are facing substantial financial pressures due to recent government policies. The industry is contending with an estimated £7 billion increase in operational costs, stemming from higher employer national insurance contributions and a new packaging levy introduced in the latest Budget.
These additional expenses are squeezing already tight margins, leading many retailers to consider price hikes and potential job reductions in the coming months.
In response to these challenges, the BRC has urged the government to ensure that no retailer faces a higher business rates bill as a result of proposed reforms. This measure aims to support investment in shops and safeguard entry-level positions within the sector.
The convergence of declining consumer confidence and escalating operational costs presents a formidable landscape for UK retailers as they navigate the early months of 2025.
As the new year unfolds, UK consumers are experiencing a notable decline in confidence regarding the nation's economic outlook. Recent data from the British Retail Consortium (BRC) reveals that consumer expectations for the economy over the next three months have plummeted to -34 in January, down from -27 in December.
This sentiment is particularly pronounced among older generations, with two-thirds of Boomers (ages 60-78) anticipating a downturn. In contrast, Gen Z (ages 18-27) remains the only demographic expecting economic improvement.
Helen Dickinson, Chief Executive of the BRC, commented on this trend, stating, "As the government warns of tough times ahead, it is little surprise that the public have caught the January blues."
She further noted that consumer confidence in the economy has reached a new low, with older generations exhibiting the most concern.
Impact on retail spending
The dip in consumer confidence is mirrored in spending behaviours. The BRC-Opinium survey indicates that personal spending on retail has decreased to -9 in January, a decline from -3 in December.
This reduction is partly attributed to the conclusion of the Christmas season, as individuals tighten their budgets for the year ahead. Dickinson observed that expectations of retail and overall spending have both fallen significantly.
This cautious approach to spending poses challenges for retailers, especially those in the non-food sectors, who are already grappling with reduced consumer expenditure and adverse weather conditions.
Retailers confront mounting costs
Compounding the issue, retailers are facing substantial financial pressures due to recent government policies. The industry is contending with an estimated £7 billion increase in operational costs, stemming from higher employer national insurance contributions and a new packaging levy introduced in the latest Budget.
These additional expenses are squeezing already tight margins, leading many retailers to consider price hikes and potential job reductions in the coming months.
In response to these challenges, the BRC has urged the government to ensure that no retailer faces a higher business rates bill as a result of proposed reforms. This measure aims to support investment in shops and safeguard entry-level positions within the sector.
The convergence of declining consumer confidence and escalating operational costs presents a formidable landscape for UK retailers as they navigate the early months of 2025.
