UK consumer spending grew at slowest rate since recession before Brexit vote
Consumer spending grew at its slowest rate since the depths of the 2008-09 recession in the three months leading to the EU referendum, but retailers have blamed bad weather for the tough trading conditions.
The monthly survey of high street and online sales from the British Retail Consortium and KPMG found that sales in the second quarter of 2016 were up 0.5% on the first quarter and 1.2% up on an annual basis. The BRC said this was the weakest performance since May 2009, when the economy was contracting during its longest and deepest postwar recessions.
In June alone, total sales were 0.2% higher than in the same month last year, but were 0.5% lower on a like-for-like basis, which takes account of increased retail capacity over the past 12 months.
David McCorquodale of KPMG said: “As consumer attention shifted indoors to escape autumnal downpours, furniture and home accessories bounced back in the month, with bigger-ticket items proving relatively resilient in the days immediately following the EU referendum.
“With May sunshine a distant memory, however, summer wardrobes remained bare as sales of women’s fashion and footwear plummeted following one of the wettest and dullest starts to a UK summer since records began.”
A separate report from the British Chambers of Commerce showed that companies were finding business conditions tough even before the result of the 23 June vote led to heightened anxiety about the outlook for the economy.
In its quarterly report, the BCC reported that weakening domestic and overseas sales for the services sector and continuing poor performance by manufacturing would have required action from the government even had the UK voted to remain in the EU.
Adam Marshall, BCC acting director general, said: “Even before the EU referendum, both business confidence and economic growth were softening in many parts of the UK. Our latest survey results, captured just before the vote, suggest that many businesses have been operating in something of a holding pattern for some time.”
Marshall said it was too early to say what impact the leave vote had had on most firms, with only anecdotal evidence from those facing a more challenging environment and those seizing new opportunities.