Data shows shoppers are reluctant to hit the high streets on Black Friday amid fears that weak consumer spending will put the brakes on economic growth in 2026.
According to monitoring company MRI Software, the number of visitors to all UK shopping destinations fell by 2% on Friday and was down 7.2% compared to the same days last year, with locations near central London offices experiencing an increase in visits.
While most Black Friday sales now happen online, the picture there was also mixed ahead of the big weekend. According to online retail association IMRG, there was a sharp decline in sales on Thursday but sales increased on Tuesday.
“The decline in the cost of living appears to be having an impact on overall activity,” said Jenny Matthews from MRI.
The weak data came as consultancy KPMG highlighted soft consumer spending as a factor likely to slow the economy over the next 12 months.
Despite the fact that much of the impact of the £26bn tax increase in Rachel Reeves’ budget will not be felt until later, KPMG suggested cash-strapped households need to remain vigilant as unemployment reaches 5.2%.
“The growth outlook to 2026 is weak, reflecting the impact of a cold labor market and weak household spending,” said Yael Selfin, chief economist at KPMG, although he pointed to “pockets” of positives, including green energy.
“The medium-term picture could improve further if planning reforms accelerate housing delivery and reduce uncertainty for investors,” he said, forecasting GDP growth of 1% for 2026 and 1.4% for 2027.
That gloomy outlook matches two other reports published Monday, both of which underscored the gloomy mood among business leaders.
The Confederation of British Industry’s services sector survey, conducted ahead of the Budget, showed the sharpest fall in optimism about the general business situation in three years, with companies citing rising costs and uncertainty about future demand.
“Looking ahead, businesses expect little respite in the near term, with uncertainty about demand and persistent cost pressures likely to hamper future recruitment and investment plans,” said CBI’s Charlotte Dendy.
Separately, the Institute of Directors said its economic confidence index, based on a survey of business leaders, was at a record low of -73 before Reeves’ budget, and improved to -72 afterward.
Anna Leach, chief economist at the IoD, said: “In the weeks leading up to the Budget, persistent speculation over tax rises undermined confidence. And with our snap poll showing that four in five business leaders (80%) view the Budget negatively, it’s no surprise that confidence remains near record lows afterwards.”
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Separately, hospitality businesses said they would take a bigger hit from the change in business rates, forcing them to rein in investment and hiring. He said the measures announced in the Budget to protect businesses as Covid-era support ends were not enough to offset the increase linked to the increase in valuation of their properties.
Under the complex tax system, many pubs in particular will see a large increase in their pricing next year – which is a key part of the business rates calculation. This is in contrast to many retailers whose rateable prices will fall due to poor trading on the high street.
In her budget speech, Reeves announced she was “introducing permanently lower tax rates for more than 750,000 retail, hospitality and leisure properties”, with higher rates to be paid at the largest retailers, including large online companies.
However, Paul Crossman, chairman of the Campaign for Pubs and licensee of three pubs in York, said: ,In most cases it appears that instead of promises of reductions in our bills (our members) will be expected to pay more, in many cases much more, after the current support ends next April.
Alex Reilly, head of the Loungers chain, said there was a mixed picture for his business because some sites were not classified as pubs, but added: “Most (hospitality) businesses will be seeing growth of some description and for our pub sector this could easily be an extinction event.”
The government has said it will provide billions of pounds in “transitional relief” to support those affected by big rises in business rates next year, but analysts have dismissed this as merely delaying the pain.
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