UK Retail Confidence Plummets as Budget Uncertainty Looms

Britain’s retail sector is facing its sharpest collapse in confidence in 17 years, according to new data released on Tuesday, just one day before the government unveils a budget expected to bring tax increases and tighter fiscal measures.

A survey by the Confederation of British Industry (CBI) shows a steep deterioration in both current sales and business sentiment as retailers brace for a further slowdown in consumer spending.

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Retail Sales Weakest in Months as Consumers Cut Back

The CBI’s monthly indicator measuring retail sales compared with a year earlier dropped to -32 in November, down from -27 in October, signaling another month of falling sales.

However, expectations for the month ahead improved slightly, with the gauge of anticipated sales rising from -39 to -24, though still deep in negative territory—showing that retailers expect continued weakness.

Why Sales Are Falling

• Persistent pressure on household budgets
• Cautious consumer spending ahead of potential tax hikes
• Rising costs of living despite easing inflation
• Uncertainty around the economic impact of the upcoming budget

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Business Sentiment Hits Lowest Point Since Global Financial Crisis

The most alarming finding came from the CBI’s quarterly business sentiment index, which plunged from -10 in August to -35—its lowest reading since late 2008, during the peak of the global financial crisis.

Alpesh Paleja, deputy chief economist at the CBI, said retailers are struggling with an extended period of weak demand:

“Retailers continue to grapple with a long spell of weak demand, as households remain cautious around day-to-day spending.”

Paleja added that uncertainty surrounding the government’s budget has left many businesses delaying investment and hiring decisions, contributing to the sector’s deteriorating outlook.

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Inflationary Pressures Ease but Fail to Lift Confidence

Despite weakening demand, there is one bright spot: the CBI’s measure of retail price inflation shows that pricing pressures are slowing sharply. Retailers are now charging prices closer to their long-run average after several years of elevated inflation driven by supply disruptions and higher input costs.

However, easing inflation has not yet translated into stronger consumer confidence or spending momentum.

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About the Survey

The CBI survey was conducted between October 28 and November 13, with responses from 177 businesses, including:

• 66 retailers
• 95 wholesalers

The results suggest that retailers entered the peak shopping season—Black Friday and Christmas—on significantly weaker footing than in previous years.

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Outlook: Budget Decision Will Shape Retail Recovery

With Chancellor Rachel Reeves set to deliver the UK’s budget on Wednesday, many retailers are anxiously awaiting clarity on:

• Tax changes
• Business rates reform
• Consumer-focused support measures
• Fiscal policy direction for 2026 and beyond

Given the current downturn in confidence and spending, any measures that ease household pressure or support business investment could be critical to stabilizing the retail sector during the crucial holiday period.