Blog: Leonie Barrie2010 outlook as chilly as the weather

Leonie Barrie | 13 January 2010

More robust Christmas trading figures out today from Matalan and N Brown seem to support yesterday’s statement from the British Retail Consortium that December’s sales were “stronger than we dared hope for.”

In fact, wintry weather provided such a boost to UK clothing and footwear sales last month that they helped lift total sales to a five-year December high.
 
So why is it that the outlook for the sector in 2010 seems so bleak – perhaps even as challenging as 2009?

A look behind the headlines shows the results were undeniably flattered by strong comparisons with last December's dire results, when sales fell 3.3% as the economic downturn reached fever pitch.

But fear seems to have played a major role too, with shoppers undoubtedly worried about what the year ahead might hold. Many will have boosted December’s numbers by bringing forward planned purchases ahead of the VAT rise on 1 January.

And even without a crystal ball it’s possible to predict with some certainty that the spectre of higher taxes in the year ahead is set to pressure consumer spending even further. No matter which party takes office in the upcoming General Election, the bill for the banking crisis in the UK is sure to lead to tax hikes.

There also remains the prospect of rising fuel prices later in the year, a likely freeze on public sector pay, uncertainties on job prospects and a continued tight credit market – making for an environment where consumers will hardly be awash with cash.

All of which combines to mean “a healthy December may be only a temporary respite on the painful road to recovery.”


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