Retail sales fall as 'trade tensions' and 'autumn budget' hit high street

Retail sales in the UK saw a decline in March, with expectations of further drops as low consumer confidence exacerbates a decade-long downturn in retail.

According to the latest trading survey by the Confederation of British Industry (CBI), sales volumes "markedly" fell in the year to March, as reported by City AM.

This represents the steepest drop since July of last year and marks six consecutive months of decline, including five straight months of double-digit decreases.

"Firms across the retail and wholesale sectors reported that global trade tensions and the Autumn Budget are weighing on consumer and business confidence, which is leading to reduced demand," said Martin Sartorius, principal economist at the CBI.

These disappointing results pose a challenge for Chancellor Rachel Reeves, who is set to present the Government's Spring Statement on March 26.

Sartorius added: "Tomorrow's Spring Statement is likely to focus on the persistent challenges facing the UK economy, reinforcing the need for policies that boost businesses' confidence to invest."

He suggested measures such as reforming business rates, backing the British Business Bank's Growth Guarantee Scheme, and adequately funding the Growth and Skills Levy could bolster business investment plans and propel the government's growth ambitions.

The findings from the CBI align with a survey conducted by KPMG, which revealed that Britons plan to reduce spending on everyday items. The survey, which polled 3,000 consumers, also indicated an increasing number of people feeling financially insecure.

Analysts at AJ Bell have pointed out the twelve-month low for FTSE350 retailers, citing concerns over weak consumer confidence and unfavourable weather conditions impacting revenue. They also noted that rising costs from national insurance contributions, wages, utilities, and raw materials could further erode profits.

The Centre for Retail Research (CRR) suggests that these recent challenges are exacerbating an issue that originated with the financial crisis in 2008.