The mood on British high streets has darkened at the fastest pace for 17 years as retailers brace for another Budget battering under Labour.
In a bleak report, the Confederation of British Industry found confidence among shopkeepers and store chains has suffered the biggest drop since the financial crisis in 2008.
The findings suggest sentiment has taken an even sharper turn for the worse than it did when the Covid-19 pandemic struck.
The report underlined the sense of dread among High Street firms over what Rachel Reeves has planned – with many left ‘exasperated’ by the late timing of the Budget during retail’s most important time of the year.
John Roberts, the founder and chief executive of electricals retailer AO World, accused the Government of ‘a lack of conviction, a lack of courage and a lack of capability’ and said ministers ‘couldn’t run a bath let alone a business’.
Thierry Garnier, chief executive of B&Q and Screwfix owner Kingfisher, warned of ‘uncertainty ahead of the Autumn Budget’.
M&S boss Stuart Machin has warned that customers are ‘worried about the Budget
Retailers are already grappling with higher national insurance contributions, a hike in the minimum wage and new packaging levies.
The industry is now braced for a further jump in the minimum wage as well as higher business rates bills and sweeping reforms to workers’ rights in Labour’s Employment Rights Bill.
The policies have hit the industry with billions of pounds in extra costs at a time when rising unemployment, stubbornly high inflation and worries about stealth taxes on income and raids on savings, pensions and property force shoppers to rein in spending.
‘Retailers continue to grapple with a long spell of weak demand, as households remain cautious around day-to-day spending,’ said Alpesh Paleja, deputy chief economist at the CBI.
‘With all eyes on the forthcoming Budget, uncertainty in the run-up has meant that businesses are holding back on plans for investment and hiring.
‘The Chancellor must avoid pulling the business tax lever once again, at risk of further curtailing firms’ efforts to build a more resilient, dynamic economy.
‘Businesses want bold decisions to wrestle back the government’s fiscal headroom and get the economy on a solid path to prosperity. This includes finding a landing zone for the Employment Rights Bill that doesn’t harm job prospects or shortchange economic growth.’
The CBI said its gauge of retail sales compared with a year earlier dropped to minus 32 in November from minus 27 in October.
And its quarterly measure of business sentiment for the next three months tumbled to minus 35 from minus ten – marking the steepest decline in morale for 17 years.
As well as fearing further tax hikes, retailers worry that the late timing of the Budget will disrupt the crucial Black Friday shopping weekend that kicks of Christmas.
‘The timing of the Budget couldn’t be worse from a retail perspective,’ said Richard Lim, chief executive of the consultancy Retail Economics.
Ian Shepherd, chairman of furniture retailer Bensons for Beds, said there was ‘a high degree of exasperation’ among retailers over the timing of the Budget.
Earlier this month, Marks & Spencer boss Stuart Machin warned Budget uncertainty was taking its toll.
‘Our customers are increasingly concerned about rising costs and higher taxes, and they’re worried about the Budget,’ he said.
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