LONDON (Reuters) - British retailers failed to increase their Christmas sales for the first time since the depths of the global financial crisis a decade ago, adding to signs of an economic slowdown ahead of Brexit.
Consumer spending appears to be fading fast after a summer surge as concerns among shoppers about the outlook for 2019 outweigh the benefit from weaker inflation and a modest pick-up in wages.
Britain’s economy slowed after the 2016 Brexit referendum and looks to have lost more momentum in late 2018 as Prime Minister Theresa May struggles to get parliament’s support for her plan for a smooth exit from the European Union in less than three months’ time.
The British Retail Consortium (BRC) said its members reported zero year-on-year total sales growth in December, the worst performance for the month since 2008.
The flat figure was down from growth of 0.5 percent in November and 1.4 percent in December 2017.
Like-for-like sales, which strip out changes in store space, dropped by 0.7 percent, the biggest fall since October 2017 excluding distortions caused by the timing of the Easter holidays.
“This comes despite some retailers desperately attempting to generate sales through slashed pricing, which has seemingly not been enough to encourage shoppers,” said Paul Martin, a partner at accountants KPMG who sponsor the survey.
A broader measure of consumer spending from Barclaycard showed spending grew by just 1.8 percent in December, down from an increase of 3.3 percent in November.
It was the slowest rise since March 2016 and represented a real-terms contraction after taking inflation into account.
Falling spending on clothing and at supermarkets was partly offset by strong rises in purchases at pubs and restaurants, which is not included in the BRC data.
Thursday’s figures chimed with recent downbeat reports from some of Britain’s biggest retailers.
Supermarkets Sainsbury’s (SBRY.L) and Morrison (MRW.L) both missed Christmas sales forecasts and sneaker retailer Footasylum (FOOT.L) said it had faced the toughest trading conditions in years. But clothing retailer Next (NXT.L) and department store John Lewis both reported a late surge in demand.
“Many Brits were more modest in their approach to Christmas spending compared to 2017, cutting back on the essentials to balance the costs of the festive season,” Barclaycard director Esme Harwood said.
Fifty percent of Britons surveyed last month were concerned about a decline in the UK economy over the coming year, up from 43 percent in 2017, according to Barclaycard.
Barclaycard’s figures are based on credit and debit card spending between Nov. 18 and Dec. 22, while the BRC data cover Nov. 25 to Dec. 29.
Reporting by David Milliken; Editing by William Schomberg