Brexit, Stagflation Pressures UK High Street
By: GoldCore
GoldSeek.com
Monday, 2 April 2018
– UK high street and wider consumer market feeling effects of financial crisis, Brexit and inflation
– 350,000 retails jobs expected to disappear between 2016 and 2020
– Centre for Retail Research predicts 9,500 shops to close this year and 10,200 in 2019
– UK is ‘worst performing’ European market for new car registrations – Moody’s
– UK’s growth outlook is the ‘worst in the G20’ – Institute of Fiscal Studies
– Consumer spending grow just 1.3% in 2018, a seven-year low
– Spending growth dropped by 2.6% since 2016 contributing to UK high street bankruptcies
The eponymous British High Street is on the verge of its biggest crisis since 2008. According to The Centre for Retail Research up to 200,000 retail jobs could be gone by 2020, this is in addition to the 150,000 that have disappeared since 2016. Many household chains are scrambling to negotiate with creditors in order to avoid collapse and total wipeout.
In 2018 alone eleven high street retailers have gone into administration, Professor Joshua Bamfield of the Centre for Retail Research has warned that 1 in 10 shops could disappear in the next two years. Whilst the government has been called on to help this isn’t something that is easily resolved.
Chancellor Philip Hammond is being lobbied to reduce business rates, however this is just one problem amongst many. In all likelihood it is the only problem which can be directly resolved by the government. Larger (more potent) problems such as Brexit uncertainty, inflation and reduced household spending are out of anyone’s control. With Brexit now less than one year away many are asking if this is something that can ever be resolved.
The cause of the problem is a mixture of the aftermath of an unresolved financial crisis and the economic effects of Brexit. The uncertainty following the referendum and the resulting currency-driven inflation has without doubt reduced shoppers’ keenness to let loose on high street, but this outcome was inevitable given the real lack of progress following the financial crisis.
It is estimated that one pound in five is spent online. Not only are retailers having to compete with the countless reams of websites that now offer a more engaged shopping experience but they are facing a market that is heavily indebted, losing jobs, stagnant wages and facing unknown changes in the coming months and years.
Like dominoes
At the end of February two major high street fixtures, Maplins and Toys R Us, announced their collapses within two hours of one another. Each are thought to be responsible for up to 3,000 members of staff losing their jobs.
This is not surprising reading. Last month Visa said the British high street had had its worst start to the year since 2012. Inflation-adjusted consumer spending in February was 1.1% lower than in 2017, after a 1.2% decline in January.
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