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The High Street is suffering its worst run in 16 years as dark clouds gather ahead of the Budget. A report by the Confederation of British Industry (CBI) showed retailers have seen sales fall for 12 months in a row – the longest period of decline since 2009.
It came as fears mount over the impact of Labour’s workers’ rights bill on jobs and investment after last year’s Budget. Store chains are still reeling from the hike in National Insurance Contributions and minimum wage as well as the prospect of higher business rates. Shirine Khoury-Haq, chief executive of the Co-operative Group, said: ‘The cost-of-living crisis is still upon us.’
As gloom descended over the industry: Mitchell & Butlers, owner of Harvester, Toby Carvery and All Bar One, said it was set for a £130million hit in 2026 due to inflation, as sales suffer in London; DFS boss Tim Stacey said the furniture brand was facing ‘subdued’ demand despite green shoots in the housing market; Shares in Marks Electrical tumbled 16.1 per cent after shoppers scaled back on spending; Starbucks is consulting on shutting ‘some’ of its 520 outlets, even as it plans to open 80 new cafes; Barclays said small firms’ lack of confidence and fears of tax hikes are holding back billions of pounds of investment.
Businesses expect to see another month of sliding sales in October as consumer confidence darkens, the CBI said. Retailers have urged the Chancellor not to clobber them in the Budget on November 26. Khoury-Haq yesterday cautioned ‘there’s a real dampened consumer sentiment out there’, citing her own group’s customer surveys. ‘Competition is high and shoppers are sensitive to price. The cost-of-living crisis is still upon us.’
Martin Sartorius, principal economist at CBI, said: ‘The Government’s fiscal decisions are continuing to bite, and retailers’ struggles send a clear signal: business cannot be asked to balance the books again at the autumn Budget.’ Bosses, including Next chief executive Lord Wolfson, have sounded the alarm over the Employment Rights Bill, warning it will make it harder to hire part-time and seasonal staff.
In a report, Barclays warned increased business costs have hit small business confidence. Its analysis suggests that if small and medium-sized enterprises (SMEs) were to invest at the same rate as larger firms, then roughly £60billion of investment in the UK could be unlocked.
The bank’s corporate bank chief Matt Hammerstein said: ‘Even small improvements in SMEs’ appetite to invest could have transformational impacts for the UK economy.’
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