Growth downgraded as consumers shun shops
Britain’s economy is expected to grow more slowly than previous forecasts as consumer spending and business investment are squeezed by inflation.
The British Chambers of Commerce has downgraded its expectations for UK GDP growth in 2022 to 3.6%, down from 4.2% in its previous forecast in December 2021 and less than half the growth of 7.5% recorded last year.
It now sees consumer spending growing at 4.4% in 2022, from its previous forecast of 6.9% while business investment is forecast to grow at 3.5% in 2022, down from the previous forecast of 5.1% and materially lower than the Bank of England’s latest projection of 13.75%.
Suren Thiru, head of economics at the BCC, said: “Our latest forecast signals a significant deterioration in the UK’s economic outlook.
“The UK economy is forecast to run out of steam in the coming months as the suffocating effect of rising inflation, supply chain disruption and higher taxes weaken key drivers of UK output, including consumer spending and business investment.
“Russia’s invasion of Ukraine is likely to weigh on activity by exacerbating the current inflationary squeeze on consumers and businesses and increasing bottlenecks in global supply chains.
The Scottish Retail Consortium also publishes data showing that the lifting of restrictions has not led to a rise in footfall which fell in February by 17.5%. This is worse than the UK average decline of 14.9% (Yo2Y) and Scotland saw the steepest decline in footfall of all UK regions.
David Lonsdale, director of the Consortium, said: “There was little boost to retailers from the rescinding of the work-from-home order at the start of the month.
“As such this was an underwhelming and disappointing performance. That said, the dip wasn’t uniform across all destinations as shopping centres saw their first monthly improvement since the autumn.”
Total UK retail footfall fell 14.9% from two years earlier – a 2.2% improvement on January and better than the three-month average decline of 17.2%, the British Retail Consortium said.