Retailers braced for 'sharpest deterioration in trading conditions' since last recession

Retailers expect to be hit by deteriorating business conditions in the coming months. Picture by Julien Behal, Press Association

RETAILERS expect to see the sharpest deterioration in business conditions since February 2009 over the coming months, according to figures from the Confederation of British Industry.

In the year to August, retail sales volumes and orders fell at their fastest since December 2008, the CBI's latest quarterly distributive trades survey found.

However, retail sales were only slightly below average for the time of year.

The survey of 81 UK firms found that only retailers without physical stores posted a rise in sales, while volumes dropped across most other sectors, including in grocers, clothing and hardware & DIY.

Internet sales growth remained below its long-run average and employment also fell for the eleventh straight quarter in August.

Anna Leach, CBI deputy chief economist, said the next few months will prove difficult for retailers.

"Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks," she said.

"With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead.

"It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon.

"But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy.

"Businesses will be looking for government action at the Budget in the coming months to alleviate some of these pressures."

Meanwhile, motor traders also reported their fourth consecutive month of falling sales, but the decline was the slowest seen over this period so far.

Across the economy more broadly, growth has been volatile in the first half of 2019, driven by companies stockpiling ahead of previous Brexit deadlines and a change in the timing of car plant annual shutdowns, the CBI found.

The body said it expected the economy to grow modestly further ahead though a no-deal Brexit would likely cause a significant hit to the financial markets.

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