UK refrains from hitting high street on Black Friday as fears grow over economy | Economics

Data shows shoppers are wary of visiting high streets during Black Friday due to fears that weak consumer spending will put the brakes on economic growth in 2026.

According to tracking company MRI Software, visitors to all UK shopping centers were down 2% on Friday and 7.2% compared with equivalent days last year; Locations close to offices in central London are among a number of locations experiencing an increase in visits.

While most Black Friday sales are now online, a mixed picture has also emerged as we approach the big weekend. Sales fell heavily on Thursday but rose on Tuesday, according to online retail association IMRG.

“The cost of making ends meet appears to impact overall activity,” said MRI’s Jenni Matthews.

The weak data came after consultancy KPMG highlighted soft consumer spending as one of the factors that could slow the economy over the next 12 months.

Despite the fact that much of the £26bn tax-raising impact of Rachel Reeves’ budget will not be felt until later, KPMG suggested cash-strapped households will remain cautious as unemployment rises to 5.2%.

“The growth outlook in 2026 is weak, driven by a cooling labor market and weaker household spending,” said KPMG chief economist Yael Selfin, although she pointed to positive “pockets” including green energy.

“The medium-term picture could improve further if planning reforms pave the way for housing delivery and uncertainty for investors reduces,” he added, forecasting GDP growth at 1% for 2026 and 1.4% for 2027.

This gloomy outlook aligns with two other reports released on Monday, both of which underscore the pessimistic mood among business leaders.

The Confederation of British Industry’s pre-budget services sector survey showed the steepest fall in optimism about the overall business situation in three years, as companies cited rising costs and uncertainty about future demand.

“Looking ahead, businesses expect little relief in the short term, with demand uncertainty and persistent cost pressures constraining future hiring and investment plans,” said CBI’s Charlotte Dendy.

Separately, the Institute of Directors said its economic confidence index, based on a survey of business leaders, was at an almost record low of -73 before Reeves’ budget and then rose by a whisker to -72.

Anna Leach, the IoD’s chief economist, said: “In the weeks leading up to the budget, persistent speculation about tax rises kept confidence under pressure. And while our snap poll shows four in five business leaders (80%) have a negative view of the budget, it’s no surprise that confidence remains near record lows afterwards.”

Separately, hospitality businesses said they would be hit hard by business rates changes and would be forced to rein in investment and hiring. They said the measures announced in the budget to protect businesses as Covid-era support ends were not enough to offset increases due to increases in the rateable value of their properties.

Under the complex tax system, many pubs in particular will see a huge increase next year in their rateable value, which is a key part of the business rates calculation. This is in contrast to many retailers whose proportional value has fallen due to weak trading on the high street.

In his budget speech, Reeves announced he was introducing “permanently lower tax rates for more than 750,000 retail, hospitality and leisure properties” paid at higher rates to the largest retailers, including major online companies.

But Paul Crossman, chairman of the Pubs Campaign and licensee of three pubs in York, said: “In most cases, instead of the discount promised on our invoices [our members] “When the current support ends next April, in many cases significantly more payments will be expected.”

Alex Reilley, chairman of the sun lounger chain, said his business had a mixed picture as some sites were not classed as pubs, but added: “Most [hospitality] “Businesses will see an increase in some definitions and this could easily be an extinction event for our pub sector.”

The government has said it will provide billions of pounds of “temporary aid” to support those affected by major rises in business rates next year, but analysts dismissed this as merely delaying the pain.