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Retail sales in the UK were weaker than expected in November, reflecting a subdued mood among consumers as economic growth sputtered and joblessness rose.
Sales volumes edged lower by 0.1 per cent on the month, following a revised decline of 0.9 per cent in October, according to the Office for National Statistics. Analysts polled by Reuters had predicted an increase of 0.4 per cent for last month.
The muted activity came in a month overshadowed by Rachel Reeves’ second budget. The chancellor announced further tax increases on top of the £40bn package in October 2024 as she sought to fund higher welfare spending and bolster her fiscal headroom.
Savings rates are high and spending has been soft as UK households seek to strengthen their personal finances in the wake of the Covid-19 pandemic and energy price shocks. A decline in food sales helped offset increased department store purchases in the month, according to ONS numbers.
“It’s possible the uncertainty generated by the Budget in late November damped households’ willingness to spend, but we’d put more weight on the longer-lasting effects of weak employment and slowing wage growth,” said Paul Dales at Capital Economics on Friday.
The Bank of England on Thursday lowered interest rates to 3.75 per cent in response to slowing inflation and tepid demand. A report from the BoE’s network of regional agents showed consumer spending on goods and services was “stagnant” with little change expected in the coming weeks.
A separate survey of households from GfK, a market research company, released on Friday showed a gauge of confidence edged up to minus 17, but this was no higher than 12 months earlier. “On that basis 2025 has been a year of no progress,” said Neil Bellamy, consumer insights director at GfK.
Official figures showed UK government borrowing fell in November, the month of the Budget, but by less than analysts had expected. The UK government borrowed £11.7bn in the month, down from the same period in 2024 but more than the £10bn forecast by economists.
Borrowing in the fiscal year to date was £132.3bn, about 8 per cent higher than the same eight-month period of 2024, according to ONS data.