Nervous families freeze spending in blow to growth hopes

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19 hours ago

Nervous families are freezing spending in a blow to hopes that the UK economy will continue its growth spurt.
Retail sales rose by just 1pc in the year to May, according to new figures from the British Retail Consortium (BRC).
The study, which suggests households are cutting back, will pile fresh pressure on Rachel Reeves amid concerns that the economy's surprisingly strong momentum in the first three months of 2025 is evaporating.
The beleaguered Chancellor will likely be forced to find tens of billions of pounds more in the autumn to repair her fiscal headroom if her hopes of a growth miracle fall short. It raises the prospect of further tax rises.
Helen Dickinson, chief executive of the BRC, said families were already cutting back on non-essentials amid growing nervousness.
She added: 'Consumers put the brakes on spending, with the slowest growth in 2025 so far. This was due largely to declines in non-food sales, as fashion and full price big-ticket items were held back by lower consumer confidence.'
Figures from Barclays separately showed card spending grew well below inflation at 1pc in the year to May, down from 4.5pc in April.
Sarah Bradbury, from the Institute of Grocery Distribution, said confidence improved slightly in May but remained 'fragile' beneath the surface, adding: 'Shoppers are still navigating financial uncertainty and continue to rely on money-saving tactics like planning ahead and buying on promotion.
'While the mood has brightened, we've yet to see this translate into meaningful changes in behaviour.'
It comes as Donald Trump's trade war and Britain's deteriorating job market spark uncertainty for households.
Hiring confidence has fallen at the fastest rate since the height of Covid in summer 2020, according to ManpowerGroup UK.
Figures from the recruiter revealed that employer confidence has plunged by 12 points to a net score of 19 since the start of the year.
It is now at the lowest level since early 2023.
In several large industries such as communications, energy and the public sector, more employers are now looking to reduce rather than increase their workforce for the first time since the pandemic.
The share of bosses blaming headcount changes on economic challenges almost doubled from the start of the year, to 64pc from 36pc.
Petra Tagg, at ManpowerGroup UK, said: 'Hitting this new low is a symptom of the entire labour market re-aligning after the changes imposed by the National Insurance and living wage increases, alongside the recent uncertainties of the US trade tariffs.
'From here, employers will 'wait and see' to gauge the volume of the reset rather than making any swift decisions towards the end of the year.'
Meanwhile, BDO said there was a risk of companies 'being paralysed by fear' and stagnating if they put off hiring and investment decisions.
The consultancy surveyed 500 C-suite executives at global businesses with more than $100m (£74m) in revenue. Some 84pc described global risks as more defined by crisis than ever.
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