Growing fears over the upcoming Autumn Budget have hampered an expected recovery for the UK retail sector, Shore Capital has warned.
Following warnings from Britain’s new Labour government over “painful” announcements to come, analysts said consumers were putting off purchases ahead of the Budget next month.
“The damage has been done,” Shore Cap said in a note, citing a seven-point drop in GfK’s consumer confidence reading last month.
“The fright has hit UK consumer confidence amidst still firm labour markets with real living standards rising.”
Prime minister Keir Starmer and chancellor Rachel Reeves have alluded to tax hikes ahead of the statement, which is due on October 30, though these are expected not to cover income and national insurance in line with Labour’s manifesto pledges.
Shore Cap warned of a scaling back in demand for big-ticket items ahead of the Budget as a result, pointing to a report of a 9% downtick at Yorkshire-based non-food retailer Buy-it-Direct in August.
“Time will tell how much [the government] has deferred purchase decisions by British shoppers rather than cancelled them,” Shore Cap noted.
“But, the mood music is one of considerable frustration for those engaged in the discretionary end of things.”