British retailers suffered their sharpest fall in sales in four years after last month’s vote to leave the EU, raising doubts about the ability of consumers to stave off a Brexit recession.
Official figures showed the economy as a whole grew fairly robustly in the run-up to the vote. But most economists are expecting a sharp slowdown as businesses and consumers retrench after the referendum shock.
The Confederation of British Industry said sales fell sharply between June 28 and July 14 and retailers cut orders with suppliers by the most since the 2008 to 2009 financial crisis.
“It’s a bad start,” said HSBC economist Elizabeth Martins.
“If you are looking for a relatively resilient consumer as we are then it’s not particularly encouraging.”
The Bank of England is expected to cut interest rates next week for the first time since 2009 and chancellor Philip Hammond reiterated yesterday the government was ready to support the economy as it went through a “period of adjustment”.
Sterling extended losses slightly to hit a day’s low against the dollar, though the industry lobby warned against drawing too strong conclusions from the data.
“While conditions in the retail sector have weakened, we should be careful about reading too much too soon, as consumers were likely to err on the side of caution in the immediate period following a vote to leave the EU,” said CBI chief economist Rain Newton-Smith.
The numbers cover the period when the government was thrown into chaos by the Leave vote and David Cameron’s decision to resign as prime minister.
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