Chancellor Rachel Reeves hit by triple blow as outlook for development is slashed, retail gross sales are falling and managers warn the excessive avenue is dying
Rachel Reeves suffered a triple blow last night after a downgrade for the UK’s growth outlook, dismal retail sales figures and a grim warning that the high street is dying.
The hat-trick of gloomy signs about the state of the economy came as the Chancellor prepared to reveal worsening official forecasts in today’s Spring Statement.
A common reason for all three was the higher costs facing businesses – much of that thanks to Labour’s £25billion raid on employer National Insurance (NI) in last year’s Budget.
The NI hike takes effect at the start of next month and Ms Reeves has already been warned that many firms will respond by cutting jobs.
Yesterday, credit-rating agency S&P Global sharply reduced its outlook for the economy this year – predicting that it will grow by just 0.8 per cent, down from a previous 1.5 per cent forecast.
S&P pointed to growing inflation pressures, uncertainty about overseas demand for UK products amid global turbulence and expectations that interest rates will not be cut as quickly as was thought.
Exporters have struggled because they are facing higher costs, said S&P Global senior economist Marion Amiot.
That, together with the recent strength of the pound, makes it harder for the UK to compete on price with rivals in other countries.
Chancellor of the Exchequer Rachel Reeves (pictured) suffered a triple blow last night after a downgrade for the UK’s growth outlook, dismal retail sales figures and a grim warning that the high street is dying
A common reason for all three was the higher costs facing businesses – much of that thanks to Labour’s £25billion raid on employer National Insurance (NI) in last year’s Budget
The NI hike takes effect at the start of next month and Ms Reeves has already been warned that many firms will respond by cutting jobs
At the same time, Donald Trump‘s decision to impose swingeing tariffs on his trading partners is creating uncertainty across the globe.
Separately, figures from the Confederation of British Industry (CBI) showed a deepening slump in retail sales this month – at the worst pace since July last year, with companies expecting the downturn to continue into April.
CBI economist Martin Sartorius said: ‘Global trade tensions and the autumn Budget are weighing on consumer confidence, which is leading to reduced demand.’
Shirine Khoury-Haq, chief executive of The Co-operative Group, which owns the Co-op food retailer, said the business faces £150million of additional costs this year.
‘We’re lucky we can absorb that… but it’s going to be really tough for many, especially smaller businesses, to take on that kind of cost hit,’ she said.
‘There is a real danger that we do see our high streets starting to die off, and we can’t let that happen.’
Steven Bell, chief economist at asset management firm Columbia Threadneedle Investments, said the outlook for the UK ‘is grim’.
He added: ‘High taxes will go up further, the welfare bill will squeeze other public spending, growth… will remain subdued. Inflation should fall substantially in 2026 and interest rates should go down too but it’ll be a hard grind.’
