Due to the high cost of living and the precipitous fall in sales of consumer goods, businesses in the UK dread a dismal Christmas. Nearly half of the households intend to reduce their holiday spending. Barclaycard, a company that processes payments, reported that 48% of those it polled between October 21 and 24, 2022, intended to spend less this Christmas, with 59% planning to buy less extravagant gifts and 42% reducing their socializing.
The British Retail Consortium said that after accounting for inflation, expenditure at major retailers was 1.6% higher in October 2022 than it was a year earlier compared to an increase of 2.2% in September 2022. The inflation rate in the UK increased drastically to 9% in 2022 from 2.5% in 2021, according to GlobalData.
For many families, Christmas could arrive later than it did in the previous year, and there could be less glitz and glamour as people focus on making ends meet, especially on account of higher mortgage payments. The Bank of England (BoE) also increased interest rates to 3%, the highest level since 2008. The BoE warned that recession in the UK could last two years, the longest in the past century, even though the absolute decrease it predicts is lesser than that in 2008–09. The British Retail Consortium’s metric of like-for-like sales, which considers changes in retailers’ floor space, decreased from 1.8% in September 2022 to 1.2% in October 2022. Once inflation is taken into account, the marginal increase in revenue masks a far larger decline in quantities.
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