Retailers look set to suffer further as cautious shoppers hold back from spending amid fears of recession, the British Retail Consortium (BRC) said today.
Kyle Monk, head of insights and analytics at the BRC, commented as the latest ONS figures estimated that the UK economy contracted by 0.2% in the second quarter of this year. Two successive quarters of contraction is defined as a recession.
Monk said: “With consumers already cautious in their spending, a contraction in the economy could put further pressure on already embattled retailers. The United Kingdom is now one quarter away from recession and the Government must take swift and decisive action, from providing clarity on the UK’s future trading relationships with the EU, to addressing the imbalances caused by the broken business rate system.
“The most recent Retail Sales Monitor have show 12-month average sales falling to their lowest point on record with both June and July showing record lows. Overall, today’s ONS results reflect the tough conditions that retail is facing.”
The ONS’ first estimate for UK GDP (gross domestic product) in the three months to June 2019 suggested that national income was down by 0.2% during the quarter, when the previous quarter it had grown by 0.5%. Compared with the same quarter a year ago, GDP was up by 1.2%, but that was a slowing from 1.8% in the first quarter of 2018.
The ONS report said the contraction of 0.2% was weaker than market expectations and than the latest Bank of England forecast, which both expected GDP to stay flat in the second quarter of the year.
The ONS detected stockpiling towards the end of the first quarter, when GDP rose by 0.5%, but said those stock levels were partly run down in the second quarter.
It also detected an “easing in wholesale, retail and motor trades, which slowed to 0.2% in the second quarter of 2019, following an increase of 1.2% in the first quarter, with all three sectors weakening compared with the first three months of the year.” The ONS also cited BRC figures showing retail sales down by 1.6% in June 2019, although it said that those figures were not directly comparable with official retail sales figures as their methods vary.