The UK high street faces an anxious wait to see if consumers will open their wallets this holiday season, as the latest figures show confidence remains shaky despite the government’s autumn budget. According to a survey by the British Retail Consortium, more Britons are now worried about the overall state of the economy compared to before the chancellor’s fiscal announcement.
Slight Uptick in Personal Outlook
The BRC’s gauge of consumer expectations for the next quarter dipped to -19 in November from -17 the previous month, signaling ongoing pessimism. However, there was a small silver lining – people’s outlook for their own finances ticked up marginally to -3 from -4 in October.
Helen Dickinson, chief executive of the BRC, noted that the budget did little to move the needle for households in either a positive or negative direction. “While there was a very slight improvement in people’s expectations of their personal financial situation, this was offset by declining expectations of the wider economy,” she said.
Cautious Optimism for Christmas
Looking ahead to the crucial Christmas period, consumers’ personal retail spending expectations inched up to +3 in November from +2 the month before. Overall individual spending plans held steady at +17, while savings intentions remained at -9.
“Personal retail spending remained positive, edging up slightly, though this was to be expected as consumers prepare for the festive season,”
Helen Dickinson, BRC Chief Executive
Dickinson pointed out that within these figures, expectations for non-food purchases stayed subdued. On a brighter note, anticipated spending on dining out saw the biggest improvement of any category as people make plans to catch up with friends and family over the holidays.
Retailers Facing Headwinds
While consumers may be showing glimmers of yuletide cheer, retailers themselves are grappling with billions in additional costs stemming from the autumn budget. The BRC estimates the industry faces an extra £7.2 billion in expenses over the coming year.
“With over £7bn in additional costs in 2023 resulting from the budget, retailers will have little choice but to raise prices or reduce investment in jobs and shops,” Dickinson warned. She urged the government to ensure that a planned overhaul of the business rates system in 2024 delivers meaningful relief for all retailers.
An Uncertain Festive Forecast
As the countdown to Christmas begins in earnest, UK retailers will be watching closely to see if consumers set aside their economic jitters and get into the holiday spirit. With budgets squeezed and confidence still fragile, it may take more than mistletoe and mince pies to coax a stellar season out of increasingly cautious shoppers.
For British businesses, the biggest gift on their wishlist this year may be a much-needed boost in consumer sentiment. Without a significant shift in the national mood, the ghost of economic woes past, present and future could haunt cash registers up and down the country for the months to come.
