UK retail sales have come in shockingly low for November, with analysts expecting a small rise of 0.4%. Instead, inflation-adjusted total sales volumes declined by 0.1%, the first such monthly decline since last April and a troubling sign for the retail sector. Consumers are already on edge as we await the next budget. That anxiety has caused a decline in spending during what is normally a jubilant and booming consumer-driven holiday period.
Supermarket sales have plummeted for four consecutive months. Consumer-facing trend This is the first clear sign of a growing consumer hesitation. Retailers quickly adjusted and manufactured eye-popping discounts to attract customers with Black Friday. That boom wasn’t as big as one might think, falling short of spending in pre-pandemic years. Analysts warn that the extended period of pre-Budget unease has done lasting damage to shoppers’ confidence and harmed spending across retail, including on the disappointing performance.
November borrowing figures from the government show a more complicated economic picture. Last week, the UK government announced that it borrowed £11.7 billion last month. This is £1.9 billion less than the sum it borrowed in the equivalent month last year. Since September 22nd 2022, this figure is £10 billion worse than where borrowing was at this time last year. Net borrowing in the financial year to November has already hit £132.3 billion. This figure further illustrates the pressures that are still present today in balancing public expenditure with taxation receipts.
Analysts had been expecting around £10 billion in borrowing in November, but it was much worse than that. This reflects a long-run gap between public spending and revenue that has long fueled doubts about the fiscal sustainability. The November borrowing total is the lowest for that month in four years. From unexpected costs related to the pandemic to constantly evolving inflationary pressures, this trend further emphasizes the need for smart financial management.
Economist Rob Wood responded in an analysis of predicted Budget impact on consumer spending, saying that with such confusion leading up to the Budget, the damage is already done. He added that this continuing uncertainty has led to retail sales falling for the last two consecutive months. This comes after a very hot streak of growth from June through September.
“The chaotic run-up to the Budget hit consumer spending, driving retail sales into two consecutive monthly falls after a run of four rises from June to September,” – Rob Wood
Chief Secretary to the Treasury James Murray stated that the government is focused on meeting these fiscal difficulties head on. He claimed that lowering debt and borrowing would be central to their economic plan.
“We will deliver on our pledge to cut debt and borrowing,” – James Murray
The current economic climate raises questions about the sustainability of consumer spending habits and the government’s fiscal policies moving forward. Inflation pressures and increasing costs of essentials are weighing on household budgets. It will be fascinating to watch how different retail sectors adjust and react in the months ahead.