A bleak future beckons UK retailers as consumers cut back on Christmas spending. As cutbacks and job losses take hold, consumers are spending less than ever as they find themselves struggling to make ends meet. Statistics released from Visa cards shows that spending has fallen by 6.2 percent in comparison to the same week in 2010. The amount spent by consumers over the last month has fallen by 2.3 percent.
The Institute for Fiscal Studies indicates that households will be less well off than they were in 2002. The organisation has studied the chancellor’s Autumn Statement and considered predictions from the Office for Budget Responsibility to discover that the average UK family will have much less disposable income over the next few years. As consumer spending is responsible for two thirds of all UK spending, the outlook is bleak for the economy.
Retailers in the UK have been cutting prices in a bid to maintain sales as pay rises are minimal, unemployment is increasing and the cost of food has risen. The Office for Budget Responsibility cut the forecast for growth from 2.5 percent to 0.7 percent based on some of these factors. Although the government is keen to move away from the dependence on consumer spending for growth, the manufacturing sector has contracted. Unemployment is set to increase in 2012, inflation is running at a higher rate than income growth and job losses continue to be a worry. The outlook is bleak for UK retailers this Christmas, and beyond.
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