UK retail sales are expected to be undermined by weaker consumer sentiment and rising prices in 2018, according to a new report from the Economist Intelligence Unit.
The UK retail market is expected to decline by 0.4% next year and is one of only three markets in the world forecast to see negative growth, along with Venezuela and Egypt.
The study reflects the significant challenges faced by UK retailers and is below the average global growth forecast of 2.5%. In contrast, markets like China and Algeria are forecast to grow by 7.3% and 8.1% respectively.
Chief retail and consumer goods analyst at The Economist Intelligence Unit, Jon Copestake, said: “In the immediate aftermath of the Brexit referendum there was a honeymoon period of bullish consumer confidence which benefitted the British retail and consumer goods sector and took many observers by surprise.”
“But with the pound in decline prices are rising, interest rates are up and political and economic uncertainty is also growing.”
The study also suggest that high street retailers will come under more pressure from online spending and discount channels, with economic uncertainty making consumers more cautious about where they spend their money.