MANCHESTER, November 21, 2025 – UK retail sales fell in October as household confidence weakened ahead of Finance Minister Rachel Reeves’ budget next week, signaling potential slowing consumer spending in the final months of 2025.

Retail sales volumes dropped 1.1% month-on-month in October, according to the Office for National Statistics (ONS), marking the first decline since May. Compared with October 2024, retail sales were only 0.2% higher, below economists’ forecasts of a 1.5% annual increase. Despite a brief dip, the British pound sterling recovered against the U.S. dollar following the report.

Consumer Sentiment Declines

In addition to weak retail sales, consumer morale slipped in November, according to the long-running GfK survey. Analysts suggest the decline reflects public uncertainty ahead of the upcoming UK budget on November 26, as households brace for potential tax hikes, welfare changes, and rising borrowing costs.

Rob Wood, chief UK economist at Pantheon Macroeconomics, stated:
“The increasingly chaotic run-up to the budget has begun to weigh on consumer spending, judging by confidence nudging down in November and weakening retail sales growth lately.”

ONS data indicated that supermarket, clothing, and mail-order sales all fell, with some retailers reporting that consumers delayed purchases in anticipation of Black Friday discounts.

Economic Pressures and Budget Challenges

The UK government faces the task of raising £20-30 billion ($26-$39 billion) due to a projected growth downgrade, higher borrowing costs, and obstacles to passing planned welfare cuts in Parliament. Economists highlight that subdued consumer spending is influenced by:

• Persistently high savings rates since 2022
• Inflationary pressures experienced in recent years
• Uncertainty in the jobs market
• Anticipated tax increases in the upcoming budget

Major retailers expressed mixed expectations for the holiday season. Sainsbury’s and Marks & Spencer remained optimistic about Christmas trading, despite overall cautious consumer behavior.

Long-Term Retail Trends

Retail sales volumes remain 3.3% below pre-pandemic levels (February 2020), indicating that while the sector has rebounded, UK consumer spending growth is still fragile. Analysts will closely watch the November budget announcement, as it may significantly influence retail performance and household sentiment heading into 2026.