LONDON (Pakistan Point News / Sputnik - 12th January, 2019) New findings indicating a serious drop in Christmas profits for the UK retail sector have been compared to similar results seen during the "credit crunch" of 2008, with Brexit uncertainty a possible cause, experts told Sputnik on Friday.
A recent survey from the British Retail Consortium (BRC), published earlier this week, indicated that UK retailers saw zero growth last month, marking the worst performance for a decade. The BRC also claimed that, despite making up just five percent of the UK economy, the retail sector paid 10 percent of all business taxes and a quarter of business rates, a situation that was neither "fair nor sustainable."
"With zero sales growth in December, comparisons are rightly being drawn with the financial crisis of 2008. The economy has slowed and consumers are facing rising utility prices, alongside high profile warnings of impending job losses such as we've seen at Jaguar," Mike Smith, the director at Company Debt, said.
Jaguar Land Rover is reportedly planning to cut some 4,500 jobs across the world, including 2,000 in the United Kingdom. According to the Society of Motor Manufacturers and Traders (SMMT), new car registrations in the United Kingdom fell by 6.8 percent in 2018.
According to data cited by the Office for National Statistics, the United Kingdom's overall economic growth slowed somewhat in the run up to November 2018, with growth coming out at 0.3 percent, itself a slight decline from the 0.4 percent growth seen in the three months leading up to October.
Declining consumer confidence is being cited as a prime cause behind the flat rate of stagnation for the UK retail sector.
"Whilst it's accepted that consumer confidence levels influence much discretionary spending, and that confidence falls during times of political and economic uncertainty, there are other factors impacting retail sales and of course many of the technological, economic and societal changes driving the restructuring of the retail sector existed before Brexit," Nelson Blackley, a research associate at the National Retail Research Knowledge Exchange Center based at Nottingham Business school, said.
According to Blackley, irrespective of how and when Brexit plays unfolds, retail will remain a key sector in the UK economy and will continue to evolve through "different channels, places and without some of the traditional High Street retail Names that many have grown up with."
At the same time, Smith suggested that the UK retail landscape would only continue to worsen as e-commerce becomes more and more popular.
"The high streets are already evolving towards experiential activities as opposed to traditional shopping and in time this may herald a resurgence of our town centers. For now, and particularly as Brexit gloom worsens, retailers who are not rapidly evolving towards the digital audience should be very worried indeed," he stressed.
In November, the Bank of England warned that the United Kingdom's potential withdrawal from the European Union without a deal could be worse for the UK economy than the 2008 crisis, with the possibility of GDP falling by as much as 8 percent in 2019.
