High street faces ‘biggest decline since 2010’
A report on consumer spending by Visa Europe paints a gloomy picture ahead of the Chancellor’s Spring Statement tomorrow. Consumer spending in the high street fell by 2.6%, with overall consumer spending falling by 1.1% compared to a year ago.
Mark Antipof, Chief Commercial Officer at Visa said:
“As we look ahead into March, consumer spending is at risk of posting one of the worst Q1 results on record. Retailers will no doubt be hoping that the milder weather will put a spring in shoppers’ steps.”
The frozen economy has already claimed numerous high street victims - at the end of last month retail outlet Maplins went into administration, along with Toys R’ Us and Jamie’s Italian. New Look is also closing eight of its Scottish outlets, along with 52 others across the UK - with as many as 1000 jobs at risk. Economists have predicted that this could reduce GDP growth in the first quarter by as much as 0.2%.
The context of this is a sustained fall in real wages at the end of last year as living costs continue to rise. Chancellor Phillip Hammond faces calls to increase public spending in the face of this emerging cost-of-living crisis, but has been very reticent about doing so, claiming that ‘there is light at the end of the tunnel…but we are still in the tunnel at the moment.’ It is likely that he is seeking a surplus ‘cushion’ to counteract the economic impact of Brexit.
Hammond is being urged by Labour figures to end austerity tomorrow as a matter of emergency. Shadow Chancellor John McDonnell said in a speech last week that:
“I believe we are approaching a moment of real national crisis on this. Essential services simply cannot cope with the strain of spending cuts that have now stretched into their eighth year, with no end in sight.”