Rachel Reeves’ Budget uncertainty sparks slump in retail sales as businesses slam ‘gloom’.uk
Businesses have given Rachel Reeves a ‘thumbs down’ according to one senior economist as her Budget continues unravelling.
Rachel Reeves’ Budget uncertainty sparked a slump in British retail sales, according to new data from the ONS that further undermine her claims of economic stability.
The statistics body reported that retail sales fell by 0.8% month on month in October, and revised down their September figure from 0.3% to just 0.1%.
Clothing and footwear shops bore the largest brunt of the dip, falling by 3.1% in October, as consumers held off purchases over fears that the Budget would clobber their finances.
The fall ended three months of continuous consumer growth.
Hannah Finselbach, senior statistician at the ONS, reported: “Retail sales fell back in October following three months of growth.”
“The fall was driven by a notably poor month for clothing stores, but retailers across the board reported consumers held back on spending ahead of the Budget.”
Figures did show a rise in consumer confidence following the Ms Reeves’ Budget, suggesting relief among the public that they haven’t been hit by direct tax rises.
However the November consumer confidence figure remains lower than that recorded over the Summer before Labour’s election victory.
Budget gloom saw a slump in retail sales this October (Image: Getty)
Following the ONS’s statement, broadcaster Andrew Neil warned that he has little faith that consumer confidence will fully recover given Ms Reeves’ Budget measures.
He predicted: “I suspect Q4 of 2024 will be another poor one for the UK economy.”
The data also appeared to have an impact on pound sterling, which fell to a six-month low following the news.
Sterling dropped by 0.22% on the dollar at $1.2566.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The first survey on the health of the economy after the Budget makes for gloomy reading.”
“Businesses have reported falling output for the first time in just over a year while employment has now been cut for two consecutive months.
“Although only marginal, the downturns in output and hiring represent marked contrasts to the robust growth rates seen back in the summer and are accompanied by deepening concern about prospects for the year ahead.
“Business optimism has slumped sharply since the general election, dropping further in November to hit the lowest since late 2022.
“Companies are giving a clear ‘thumbs down’ to the policies announced in the Budget, especially the planned increase in employers’ national insurance contributions.”
