UK consumers curbed their spending for the first time in five years in 2017 as surging inflation and falling real wages took their toll on high street retailers.
Visa’s UK consumer spending index slipped 0.3 percent last year from 2016. It also fell an annual 1 percent in December, the crucial Christmas shopping period for stores. It’s unlikely to recover this year, the credit card company said.
“Household purchasing power is being continually eroded,” said Annabel Fiddes, principal economist at IHS Markit. “Meanwhile, consumer confidence remains relatively muted amid uncertainties over the strength of the UK economy and the ongoing Brexit negotiations. It seems unlikely that expenditure will bounce back to the levels of growth seen in 2016 anytime soon.”
Online sales growth slowed to an annual 2 percent last month, from 2.4 percent in November, while face-to-face spending slumped 2.7 percent, declining for an eighth straight month, Visa said. Debenhams Plc last week warned that earnings will be less than analysts forecast following flat post-Christmas sales.
Separately, a Deloitte survey of UK chief financial officers showed Brexit was their biggest concern in the fourth quarter of last year, and is seen as posing a growing risk to business. About three-quarters also expect it to lead to a worsening of conditions in the long term, up from 60 percent in the third quarter.
The survey was carried out in early December, and included the views of 112 CFOs, whose companies make up approximately 19 percent of the UK quoted equity market.