Consumer confidence in the UK took another beating in February on fears around the impact of higher employer national insurance on businesses and the prospect of another hike in energy prices.
The British Retail Consortium (BRC) analysis shows that consumer expectations over the next three months about the state of the economy weakened from -34 points to -37 between January and February, marking the fifth straight decline.
Sentiment around people’s personal finances also fell, down from -4 to -11. However, expectations for personal spending on retail actually increased, from -9 to -5 in February.
Expectations around personal spending overall and personal savings remained the same.
“With many businesses warning of the impact that April’s employer national insurance contributions increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried,” said Helen Dickinson, Chief Executive of the BRC.
“And while there was a positive increase in expectations of personal retail spending, this may be largely driven by the expectations of higher prices in the future.”
She noted that expectations of higher prices were not unfounded, with two-thirds of retailers in a recent BRC survey saying that prices will have to rise as a result of the £7bn in additional costs facing the industry, including higher employer NICs and a new packaging levy. Almost half of retailers have also warned of hiring freezes, with entry-level jobs expected to be among the first to go as firm’s seek to cut costs.
Dickinson concluded: “As the Government bill on the future of business rates progresses through Parliament, it is essential that no shop ends up paying more in rates as a result of these reforms, otherwise retailers will face a triple whammy of Budget costs, business rates rises, and new packaging and recycling levies, all of which will filter through to consumer prices.”
NAM Implications:
- No surprises surely…
- ….given at least five drivers noted above…
- …to which add uncertainty and especially distrust re everything.
- And be thankful that things are as ‘good’ as they are, considering…
