UK high-street gloom deepened as retail sales dropped and consumer confidence fell to its worst level since the pandemic. Clothing sales were particularly badly affected, with retailers reporting a poor start to autumn and winter ranges. Weaker-than-usual attire sales also dragged on supermarket volumes.
The weather played a role on a wet, rainy morning, though September had been unusually warm and sunny earlier. Retailers noted lower footfall and customers cutting back as the cost of living continues to bite. GfK consumer confidence data shows Britons are more miserable than at any time since Covid, with future spending plans down and high-income groups seeing the sharpest drop in sentiment.
UK assets have shown resilience ahead of next week’s budget. Gilts have weathered a global selloff, with 30-year yields falling three basis points since Andy Burnham took office on July 20 — the best performance among developed economies. Rathbones Asset Management shifted to neutral on long-duration UK bonds from underweight.
Investors are giving Prime Minister Andy Burnham and Chancellor John Healey the benefit of the doubt, expecting a comparatively muted budget low on giveaways with limited gilt issuance. David Coombs of Rathbones noted pre-budget messaging has been more disciplined than previous budgets.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing