UK retailers face the prospect of lower consumer spending in early 2025 as sentiment about the economic outlook worsens, with consumer confidence dropping by eight points to -27, according to British Retail Consortium (BRC) and Opinium data.

Insights from BRC-Opinium indicate that over the first quarter of 2025 intentions for UK retail spend saw a downturn to -3 in December, falling from the positive stance of +3 in November. 

Overall spending inclinations also experienced a reduction to +11 in December, compared to +17 in the previous month. 

The sentiments stem from a survey conducted with 2,000 UK adults between 10 and 13 December 2024.  

The findings also reveal that perceptions of personal financial situations have stagnated at -3 since November, while sentiments about the broader economy have declined sharply from -19 to -27. 

BRC chief executive Helen Dickinson explained this dip in consumer confidence has “created a widening gap between expectations of the economy and of people’s own finances, which remained unchanged”.  

Dickinson said: “The public’s spending intentions – both in retail and beyond – dropped 6pts, with expectations of spending in nearly every retail category falling. If these expectations are realised, retailers could find themselves facing a New Year spending squeeze just as they unveil their January sales.” 

She also stated that views on the matter varied significantly by age, with individuals aged 18 to 35 years displaying a more positive outlook compared to older generations on both issues. 

Challenges for UK retail in 2025

In November 2024, more than 80 UK retailers expressed their concerns in a letter coordinated by the BRC to UK chancellor Rachel Reeves, highlighting the rising costs driven by changes to National Insurance, the National Living Wage, and the ongoing packaging levy. 

“The weak spending intentions could pave the way for a challenging year for retailers, who face being buffeted by low consumer demand and £7bn ($8.68bn) of new costs from the Budget set to hit the industry in 2025.  

“With sales growth unable to keep pace, retailers will have no choice but to raise prices or cut costs – closing stores and freezing recruitment. To mitigate the impact this will have on growth, government must ensure that its proposed business rates reform does not result in any shops paying higher rates than they already do,” Dickinson added. 

Recent data from BRC and Sensormatic released on 3 January 2025, revealed that total UK footfall decreased by 2.2% in December year-on-year, up from a 4.5% fall in the previous month. 

 By Just Style