UK shoppers cut spending as government borrows more than expected

British shoppers cut spending more than expected in September as they felt the effects of rising prices, and a one-off bank holiday to mark Queen Elizabeth’s funeral also weighed on retail sales for the month.

Separate official data showed that Britain’s borrowing rose more than expected, underscoring the challenge facing new Treasury Secretary Jeremy Hunt and whoever succeeds Liz Truss as Prime Minister next week.

Sales volumes fell 1.4 percent from August — almost triple the 0.5 percent decline in a Reuters poll of economists.

In the three months to September, sales fell 2.0 percent, the largest decline since the first three months to September 2021.

Sterling was down against the US dollar following the release of the data, falling from just above $1.12 to as low as $1.175.

Consumers have reined in spending as inflation hit 10 percent, adding to the strain on an economy that is expected to slide into recession soon.

Households also face the prospect of greater pressure on their spending power in 2023 after Hunt scrapped Truss’ previously planned tax cuts. She announced her resignation on Thursday and began finding a new prime minister by next week.

A survey released overnight showed consumer confidence remained near a record low as households reacted to the combination of high inflation and chaotic UK politics.

The ONS said it was unable to estimate the extent of the impact of the Queen’s funeral on retail sales figures.

“The decline in sales volume in most major categories suggests that high inflation is still weighing heavily on spending,” said Ruth Gregory, an economist at consultancy Capital Economics.

Several retailers including Britain’s largest supermarket group Tesco and online fashion retailer ASOS have warned about earnings prospects this month as they face higher energy and labor costs and a weak pound.

Total sales volume fell 6.9 percent year-on-year, according to ONS.

Separate data released by the ONS shows Britain borrowed £20.01 billion ($22.37 billion) in September, more than the £17.1 billion expected in the Reuters poll of economists.

So far, borrowing for the 2022/23 financial year, which started in April, stands at £72.5bn, some 26 per cent down on the same period last year but almost £36bn up on the April-September 2019 period earlier the pandemic.

Carl Emmerson, deputy director of the Institute for Fiscal Studies think tank, said the deficit was in line with forecasts by the UK’s official budget watchdog but would widen again once the government’s expensive energy price subsidies begin.

He said borrowing could be close to £200billion this year, double the Office for Budget Responsibility’s forecast.

Hunt will try to show investors he can fix public finances when he presents a budget on Oct. 31 that is expected to include spending cuts and possibly more tax hikes.

https://www.independent.ie/business/world/uk-shoppers-cut-their-spending-as-government-borrows-more-than-expected-42084402.html UK shoppers cut spending as government borrows more than expected

Fry Electronics Team

Fry Electronics.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@fry-electronics.com. The content will be deleted within 24 hours.

Related Articles

Back to top button