Consumer spending in the U.K. last month took its largest fall since July as worries about Brexit weighed on consumer confidence.
According to a report in Reuters, citing Visa, consumer spending in the U.K. declined 0.7 percent on a year-over-year basis in November, a steeper decline than the 0.2 percent dip in October. The data provided by Visa is based on inflation-adjusted usage data from debit cards, credit cards and prepaid cards, reported Reuters. November included the Black Friday shopping weekend which is seen as the kickoff to holiday spending. Retailers had hoped that five-day shopping period from Black Friday to Cyber Monday would counter some of the slowdown in consumer spending, noted the report.
Economic conditions that are less than stellar in the U.K., and the uncertainty surrounding the U.K.’s departure from the European Union is weighing on the spending confidence of consumers in the U.K. “Economic conditions are likely to remain challenging for retailers, at least in the short term,” Visa economist Adolfo Laurenti said, according to Reuters.
The commentary out of Visa dovetails with negative commentary out of the head of Sports Direct, the retail chain that does business in the U.K. Its CEO Mike Ashley warned that U.K. retailers had a bad holiday shopping season and that the lackluster sales were unexpected by many retailers in the U.K. “November was the worst on record, unbelievably bad. I don’t blame the guys, no one could have budgeted for that,” Ashley said when announcing first half of 2018 financial results for Sports Direct, reported The Financial Times. He warned that the slowdown in sales will “literally smash them to pieces,” referring to retailers. To underscore the pain U.K. retailers are facing, The Financial Times pointed to a profit warning from Superdry, the fashion company, and disappointing weekly sales results from John Lewis, the department store.