The CBI’s latest Distributive Trades Survey confirms a pessimistic outlook for the UK retail sector.
The majority of retailers surveyed said retail sales volumes in the year to August fell at the fastest pace since March 2021. Sales are expected to continue to contract next month, but at a slower pace.
Most retailers anticipate a moderate deterioration in their business situation in the coming months, with plans to reduce investment and staff headcount.
“Retail sales in August fell at their quickest pace in over two years, culminating a summer that many retailers would rather forget,” said Martin Sartorius, CBI Principal Economist.
“Against a backdrop of rising interest rates and weak demand, retailers foresee cuts to investment over the next year, while employment is expected to fall again next month.”
He added: “Improving the business environment for retailers should start with creating a stable, investment-focused tax regime. This includes building on the Spring Budget, in the Autumn Statement, by making full expensing permanent and expanding the scheme to include hire purchase, leasing, and unincorporated businesses, in addition to freezing business rates from rising with inflation.”
Figures released by the Office for National Statistics (ONS) last week showed that UK retail sales volumes fell by 1.2% in July after consumer demand was impacted by the wet weather and cost of living crisis.
