Rachel Reeves was accused of ruining Christmas for retailers as her Budget drives shoppers away from high streets.
Customers scarred by the Chancellor’s £30billion tax raid are keeping their purse strings tight, figures show.
After Black Friday sales at the end of November were surprisingly shunned, shops say December has been disastrous, with the ‘bleak’ outlook stretching into January.
It means there is little sign of festive cheer during what is supposed to be the ‘Golden Quarter’ for hard-pressed stores in the run-up to Christmas.
At the same time, they are being battered by Labour policies, facing soaring business rates, surging costs after a raid on employers’ National Insurance and sharp increases in the minimum wage. They will also have to grapple with an avalanche of new workers’ rights approved by Parliament this week.
Tory business spokesman Andrew Griffith said: ‘Doom and gloom in our high streets is mirrored in pubs, restaurants and even car showrooms as shoppers hunker down ahead of tax rises to come.
‘This is a crucial time of year for businesses, but Reeves has risked ruining everyone’s Christmas with higher costs and no vision or optimism for the year ahead. She’s like a hangover without the Christmas party beforehand.’
The dark picture comes on ‘Super Saturday’, usually the busiest day of the year for shops as customers dash out to buy last-minute gifts.
Rachel Reeves has been accused of ruining Christmas for retailers as her Budget drives shoppers away from high streets
Customers scarred by the Chancellor’s £30billion tax raid are keeping their purse strings tight, figures show
From its survey of retailers, the Confederation of British Industry (CBI) said sales had dropped this month compared to last, describing December as ‘poor’.
Sales are expected to fall further in January to be the weakest month in four years – since March 2021, during the pandemic. Even online purchases declined and are ‘expected to contract at a steep pace next month’.
Mr Griffith added: ‘It’s worrying that retail sales volumes have fallen but no surprise given that consumers have taken such a battering with taxes going up. Under Labour, people are having to tighten their belts and make savings in the weekly shop.’
Consumer expert Kate Hardcastle said: ‘It paints a stark picture. Households are behaving like risk managers, not shoppers. When confidence erodes, people delay – they think twice instead of buying once. The slump doesn’t stop at Christmas. A retail sector expecting sales to slide into January shows that this isn’t about seasonal whimsy, it’s uncertainty. If people feel there’s a chance they might regret a purchase, they simply won’t make it.
‘December used to be the month where people “locked in” joy. Now it’s the month where people ask, “Am I sure?”.’
Delivering her Budget in November, Ms Reeves said she was ‘asking ordinary people to pay a little bit more’, but that the biggest burden would fall on those ‘with the broadest shoulders’, through higher taxes on property and savings.
Coming just two days after the measures were announced, Black Friday deals failed to tempt shoppers with sales unexpectedly falling for the month by 0.1 per cent, the Office for National Statistics revealed on Friday.
Danni Hewson, head of financial analysis at A J Bell, blamed rumours of potential tax hikes, saying they had ‘unnerved consumers at the very peak of the festive shopping period’, and that customers ‘continued to display an abundance of caution’.
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Delivering her Budget in November, Ms Reeves said she was ‘asking ordinary people to pay a little bit more’
Richard Lim, of Retail Economics, said: ‘The timing of the Budget could not have been worse for the retail sector, which relies on sales in the ‘Golden Quarter’ [October to December]. It was the Wednesday before Black Friday, which cast such a sense of anxiety for consumers, especially with all of the speculation.
For households, the cost of living still remains the biggest challenge. Although we’ve seen falling inflation over the last four years, we haven’t seen falling prices, and it’s squeezed people’s discretionary spending.
‘All of the leaks that came before the Budget, testing the reaction to see what might happen if there was an increase in income tax, have been hugely unhelpful for household confidence.’
Reform UK MP Richard Tice said: ‘Rachel Reeves might as well have handed British businesses a lump of coal this Christmas. Her job-destroying, tax-raising Budget nightmare is throttling economic growth, smashing jobs and trashing consumer confidence.’
A Treasury spokesman said last night: ‘We are delivering stability, cutting borrowing and debt and getting inflation down. That’s helped deliver six interest rate cuts since the election.
‘The Budget doubled down on our work to grow the economy and create good jobs.’
