UK shoppers spent less in December on Brexit, election worries

Industry group says UK’s trade negotiations with EU will have ‘big impact’ on consumer spending this year.

UK ''Get ready for Brexit''
The terms of the UK's exit from the EU is likely to affect confidence and shopping patterns of UK consumers, said the British Retail Consortium [File: Vickie Flores/EPA]

Shoppers in the United Kingdom cut back on spending in late 2019, rounding off the worst year since at least the mid-1990s for retail sales as measured by an industry group which blamed uncertainty about Brexit and last month’s election for the slump.

However, another survey suggested Britons turned more confident after Prime Minister Boris Johnson‘s emphatic election victory on December 12.

Total retail spending fell by an annual 0.9 percent in November and December combined, the British Retail Consortium (BRC) said, lumping the two months together to smooth out volatility caused by changes in the dates of Black Friday between 2018 and 2019.

BRC chief executive Helen Dickinson said last year was the first since the group began its records in 1995 to show a full-year fall in sales – down by 0.1 percent – as two missed Brexit deadlines and the election weighed on consumer confidence.

“Looking forward, the public’s confidence in Britain’s trade negotiations will have a big impact on spending over the coming year,” Dickinson said.

Johnson has said he will negotiate a new trade deal with the European Union before the end of this year and avoid the economic hit of tariffs and other trade barriers when a no-change transition period ends on December 31.

The BRC said like-for-like sales – which strip out changes in retail floor space from one year to the next – fell by an annual 1.2 percent in the combined November-December period.

Payment card company Barclaycard also sounded downbeat about broader consumer spending which has helped the UK’s economy to cope with the hit from lower investment by businesses since the Brexit referendum result of 2016.

Barclaycard said spending rose by an annual 1 percent in December – lower than the growth of approximately 1.5 percent in the autumn – with supermarkets showing a fall of 0.9 percent.

But cinema sales were up 19 percent, helped by the release of the latest Star Wars and Frozen films. Spending in pubs and on takeaway food rose by about 12 percent.

Thursday’s weak surveys chimed with official data which showed the slowest retail sales growth since April 2018 in November. Industry data this week showed the lowest sales growth over Christmas for supermarkets for five years.

However, a survey commissioned by Barclaycard showed that after the December 12 election, 41 percent of consumers expressed confidence in the UK’s economy, up 10 percentage points from November to the highest level since March 2017.

At the same time, only one in five planned to buy a big-ticket item during 2020.

The survey was conducted between December 17 and December 19 by Longitude Research and included responses from 2,000 people.

Source: Reuters