Retail sales fall as Black Friday deals fail to attract shoppers

Retail sales unexpectedly fell in November as Black Friday discounts failed to boost spending, official figures show.

Sales at supermarkets fell for the fourth month in a row, while discounts at retailers during November did not boost Black Friday spending as much as in recent years, the Office for National Statistics (ONS) said.

Analysts expected total sales volume to rise 0.4% in November. Instead, they fell 0.1%, however, sales in recent months have increased thanks to more purchases of computers, clothing and furniture.

A separate survey published on Friday suggested shoppers have been keen to spend in the run-up to Christmas, and consumer confidence in December equaled a 16-month high.

The GfK consumer confidence survey also found that households felt better about their finances in the coming year than before, although both measures remain negative overall.

The reduction in interest rates to 3.75% on Thursday could strengthen that confidence and “retailers will hope that this can stimulate a rebound in consumer spending,” Oliver Vernon-Harcourt, head of retail at Deloitte, said of the crucial pre-Christmas trading period.

However, some analysts said weeks of uncertainty leading up to the budget had hit shoppers’ confidence to spend.

“The chaotic run-up to the Budget hit consumer spending, causing retail sales to suffer two consecutive monthly declines after a run of four increases from June to September,” said Rob Wood, chief UK economist at Pantheon Macroeconomics.

The ONS household survey showed that 31% of adults said they planned to take advantage of Black Friday deals, but 19% said they planned to buy less than last year.

Separately, the ONS announced on Friday that the UK government’s borrowing was higher than expected last month.

Borrowing – the difference between public spending and tax revenue – was 11.7 billion pounds in November, while analysts expected around 10 billion pounds.

However, the figure was £1.9bn lower than the same month last year and was the lowest November borrowing in four years. The Office for National Statistics (ONS) said the fall was mainly due to higher tax receipts and National Insurance contributions.

Government borrowing for the financial year to November has now reached £132.3bn, £10bn more than at the same time last year.

Part of this is because the government reversed a decision to restrict winter fuel payments, as well as pay higher public sector wages and inflation-linked benefits.

Treasury Chief Secretary James Murray said last month’s budget “will deliver on our promise to reduce debt and borrowing”.

“£1 of every £10 we spend goes towards interest on debt, money that could otherwise be spent on public services,” he said.

But shadow chancellor Mel Stride said the government was “accumulating ever-increasing debt”.

“After removing the two-child benefit cap and abandoning welfare reform, Labor is taking on more and more debt to fund irresponsible spending,” Stride said.

The government would need to “deliver a significant slowdown in borrowing over the coming months” if it is to meet the Office for Budget Responsibility’s target of £138.3bn for the current financial year, said Matt Swannell, chief economic adviser at the EY Item Club.