Consumer confidence showed modest signs of improvement in December, but expectations for retail spending continued to soften, underlining the challenging trading environment facing retailers in the months ahead.
According to the latest BRC-Opinium data, released today, consumers’ expectations for the state of the economy over the next three months improved to -38 in December, up from -44 in November. Confidence in personal finances also strengthened, rising to -10 from -16 over the same period.
However, this cautious optimism did not fully translate into stronger retail spending intentions. Expectations for personal spending on retail slipped to +6 in December, down from +8 in November, marking the third consecutive monthly decline. By contrast, expectations for overall personal spending increased to +17, up from +14, suggesting consumers may be prioritising non-retail costs.
At the same time, intentions to save weakened, with expectations for personal saving falling to -9 in December, compared with -5 in November.
Commenting on the figures, Helen Dickinson, chief executive of the British Retail Consortium, said that while the recent Budget had provided some reassurance, the broader outlook remains difficult for retailers.
“With the Budget not as bad as feared for households, confidence saw a slight uptick in December. Yet the overall picture remains gloomy, with confidence in the economy stuck below -30 for eleven out of the last twelve months,” she said. “Expectations for retail spending continued to slide for the third consecutive month, proving challenges remain in the year ahead.”
Dickinson urged the government to focus on measures that support business growth, warning that cumulative regulatory pressures could weigh heavily on the retail sector.
“Government needs to pull the levers of growth, tearing down red tape and bureaucracy to allow businesses to flourish and create more jobs,” she added. “From the Employment Rights Bill to rules on less healthy foods, the government must consider the cumulative impact of its policies on business, ensuring new regulations are workable and do not punish responsible businesses.”
Meanwhile, the Employment Rights Act has received Royal Assent today, introducing a wide-ranging overhaul of employment law, with changes due to be phased in over a two-year period to give businesses time to prepare.