Retail optimism rises, but is it too soon to celebrate?

As an avowed shopaholic, I noted that retailer’s optimism about their profits and growth for the year ahead has reached a near-decade high, amid sustained business confidence since the Autumn budget. Data released by the Lloyds Business Barometer showed highest figures since August 2015 and ONS data showing retail sales rose sharply in January and February.

Confidence rises, but economic uncertainty lingers

Has sentiment changed so much? Separate figures from the ONS showed real incomes increased at their fastest pace in nearly a decade at the end of last year helping to fuel customer confidence and spending. Consumption could be further boosted if households save a little less, as savings ratios are well above their long-run average at 12% in the final quarter. There’s nothing like extra money in the pocket to boost spending.

How long will this confidence last? Last week the OBR halved its 2025 growth figures from 2% to 1%.  And the economy could take a bigger hit with tariffs that may come from across the pond.

There do seem to be some green shoots in the economy, despite businesses waiting for decisions to be made at home and overseas.

Businesses and consumers face challenges in April

April brings headwinds, not just for businesses, but individuals too. From 6^th April, the main rate of Employers’ National Insurance climbs from 13.8% to 15%. The earnings threshold that triggers the levy will drop from £9,100 to £5,000.  The minimum wage rises by 6.7% for those over 21 years of age and both rises disproportionately effect those with a low-paid workforce, such as in hospitality. Despite my local high street, which has a huge amount of mainly high-end restaurants, being chock-a -block, we generally know this sector is suffering, and that rates relief are reducing.

For individuals, bills are racing ahead of inflation, as April sparks increases with council tax, energy and water bills all going up, that’s before you even mention broadband, phone, TV licences and car tax, across the board personal costs are racing ahead. It’s been dubbed “Awful April.”

Whilst we are seeing green shoots, job vacancies are at a record high, is it too early to think that we are climbing our way out of the gloom and doom loop?

To discuss how these economic shifts could affect your business, contact Outsourcing Partner, Sudhir Rawal today.