Shoppers held back from visiting high streets over Black Friday, data shows, amid fears weak consumer spending will put the brakes on economic growth in 2026.
Visitors to all UK shopping destinations were down 2% on Friday and 7.2% compared with the equivalent days last year, according to the monitoring company MRI Software, with locations near central London offices among the few to experience a lift in visits.
While most Black Friday sales are now online, the picture there was also a mixed bag in the run-up to the big weekend. Sales down heavily on Thursday but up on Tuesday, according to the online retail association IMRG.
“The cost of living squeeze appears to be weighing on overall activity,” said Jenni Matthews from MRI.
The lacklustre data came as the consultancy KPMG highlighted soft consumer spending as one factor likely to hold back the economy over the next 12 months.
Despite the fact that most of the £26bn tax-raising impact of Rachel Reeves’s budget would not be felt until later, KPMG suggested cash-strapped households would continue to be cautious, as unemployment ticks up to 5.2%.
“The outlook for growth in 2026 is subdued, reflecting the impact of a cooling labour market and weak household spending,” said KPMG’s chief economist, Yael Selfin, although she pointed to positive “pockets”, including green energy.
“The medium-term picture could improve further if planning reforms unlock housing delivery and uncertainty reduces for investors,” she added, predicting GDP growth of 1% for 2026 and 1.4% for 2027.
This gloomy outlook chimes with two other reports published on Monday, both underlining the downbeat mood among business leaders.
The Confederation of British Industry’s services sector survey, carried out before the budget, showed the fastest decline in optimism about the general business situation for three years, with companies citing rising costs and uncertainty about future demand.
“Looking ahead, businesses expect little near-term relief, with uncertainty about demand and persistent cost pressures set to constrain future hiring and investment plans,” said the CBI’s Charlotte Dendy.
Separately, the Institute of Directors said its economic confidence index, based on a survey of business leaders, was at a near record low of -73 in the run-up to Reeves’s budget, and improved by a whisker to -72 afterwards.
Anna Leach, the IoD’s chief economist, said: “In the weeks running up to the budget, persistent speculation over tax rises kept confidence subdued. And with our snap poll showing that four in five business leaders (80%) view the budget negatively, it is no surprise that confidence remains close to record lows afterwards.”
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Separately, hospitality businesses said they would take a big hit from business rates changes, forcing them to rein in investment and hiring. They said measures announced in the budget to protect businesses, as Covid-era support comes to an end, were not enough to offset rises linked to the increase in rateable value of their properties.
Under the complex tax system, for many pubs in particular there will be a big increase next year in their rateable value – a key part of the business rates calculation. This is in contrast to many retailers whose rateable value will fall because of poorer trade on high streets.
In her budget speech, Reeves announced that she was introducing “permanently lower tax rates for over 750,000 retail, hospitality and leisure properties”, paid for with higher rates on the biggest retailers, including big online companies.
However, Paul Crossman, the chair of the Campaign for Pubs and the licensee of three pubs in York, said: “In the vast majority of cases it seems that instead of the promised reduction in our bills [our members] will be expected to pay more, in many cases vastly more, once the existing support finishes next April.”
Alex Reilley, the head of the Loungers chain, said for his business there was a mixed picture because some sites were not categorised as pubs, but he added: “Most [hospitality] businesses will be looking at an increase of some description and for our pub sector it could quite easily be an extinction event.”
The government has said it will provide billions of pounds in “transitional relief” to support those hit by big increases in business rates next year but analysts have dismissed this as merely delaying the pain.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: theguardian.com
