UK Annual Forecasts 2010–15: Retail and the Economy

Introduction

The economic recovery in the UK is under threat in 2011 and this is having an impact on consumers' retail expenditure, with high unemployment, low consumer confidence and pressure on disposable incomes all changing shopping habits. The economic environment is expected to remain weak until the second half of 2012 - meaning retailers have further tough times ahead of them.

Features and benefits

• Make informed strategic decisions based on our assessment of the UK economy
• Gain insight on the key economic factors and how this will impact retail growth over the next five years
• Use the economic forecasts to 2015 to help identify the shape of the economic recovery and plan sales growth accordingly

Highlights

• Uncertainty is driving house prices and volumes down, as many are reluctant to move. This is impacting big ticket and home-related purchases. However, as the housing market recovers from 2013, these sectors will benefit from pent up demand. Lack of housing equity withdrawal will also impact spending on home-related sectors.
• High unemployment will hit demand, particularly for discretionary purchases, and there will be an increased focus on value in food & grocery. Moreover, many more will tighten spending due to concerns of possible unemployment for themselves, family or partners.
• High inflation and stagnant wage growth have both had an adverse impact on disposable income. The latter will remain squeezed until 2014 when more substantial wage growth should come through and unemployment should fall.

Table Of Contents

OVERVIEW
Summary
Methodology

EXECUTIVE SUMMARY
Introduction
Scope
Methodology
Principle Sources

ECONOMIC SUMMARY
Economy takes a turn for the worse and recovery will be slow and gradual …
Recovery takes a turn for the worse
Interest rates will remain low short term
Unemployment set to peak in 2012
Disposable income takes a hit
Inflation puts pressure on households' budgets
Uncertainty leads to further slowdown in the housing market
Consumers forced to dip into savings
Consumer confidence will stay low into 2012

APPENDIX
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LIST OF TABLES

Table: Principle sources of data and information

LIST OF FIGURES

Figure: Verdict forecasting methodology