{"id":375521,"date":"2025-08-26T17:46:11","date_gmt":"2025-08-26T17:46:11","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/375521\/"},"modified":"2025-08-26T17:46:11","modified_gmt":"2025-08-26T17:46:11","slug":"uk-retail-shares-fall-amid-fears-of-squeeze-in-consumer-spending-retail-industry","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/375521\/","title":{"rendered":"UK retail shares fall amid fears of squeeze in consumer spending | Retail industry"},"content":{"rendered":"

Fears that UK consumers will rein in spending in the second half of this year has knocked the values of some of Britain\u2019s biggest retailers including the parent groups of Primark<\/a> and B&Q, and DIY chain Wickes.<\/p>\n

The retailers\u2019 share prices dropped on Tuesday morning after analysts at Deutsche Bank warned that retail spending could be hit by the cooling UK jobs market<\/a> and easing growth in household income.<\/p>\n

\u201cFear of unemployment may constrain household spending amid concerns over inflation,\u201d the analysts wrote in a note that flagged particular concerns about Next, Wickes and Kingfisher, which owns B&Q and Screwfix, as well as Associated British Foods<\/a>, which owns Primark.<\/p>\n

It said that essential costs for households were likely to increase, putting \u201ca squeeze\u201d on discretionary spending such as clothing and DIY. In contrast, food retailers, such as Tesco and M&S, and the cut-price operator B&M are expected to benefit as the cost of groceries continues to rise.<\/p>\n

Predictions that Rachel Reeves will raise taxes in her budget later this year<\/a> could also hurt consumer confidence. \u201cThere is a fear that the concerns created by the tax-raising measures seen in the 2024 November budget will repeat in the 2025 budget which will have a negative impact on spending,\u201d Deutsche Bank added.<\/p>\n

Its analysts warned that \u201ccracks are emerging in the UK labour market\u201d, citing the recent rise in the unemployment rate and a fall in the number of people on company payrolls.<\/p>\n

Shares in Kingfisher<\/a> fell by 4.3%, making it the top faller on the FTSE 100 share index, while Associated British Foods lost 3.5%. Wickes tumbled 8.6% on the smaller FTSE 250 share index.<\/p>\n

While poorer households have been under pressure for some time, high income groups are now showing signs of concern about the future, according to Deutsche\u2019s \u201cfear index\u201d, which incorporates six factors including current unemployment risk, likelihood to voluntarily change jobs, concerns around financial future and near-term cash concerns.<\/p>\n

The note was published as a separate study, Asda\u2019s monthly income tracker revealed the first decline in disposable cash for middle-income families in two years. In July, those on gross annual earnings of about \u00a341,000 experienced a 1.6% year-on-year decline in their income.<\/p>\n

Lower-income families were the hardest hit, as spending power slumped by 11%, resulting in a shortfall of \u00a373 each week, according to the research carried out for the supermarket by the Centre for Economics<\/a> and Business Research (Cebr).<\/p>\n

However, chunky increases in disposable income for the better-off meant that average disposable income rose by 2.4% in July compared with a year before to \u00a3255.<\/p>\n

Sam Miley, the head of forecasting and thought leadership at Cebr, said: \u201cWhile wages are expected to rise over the remainder of the year, persistently high inflation will put continued pressure on purchasing power, weighing on further gains [in disposable income].\u201d<\/p>\n

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Deutsche Bank\u2019s research suggests consumer fears have been on the rise since the end of the pandemic, and recent changes have been largely driven by consumers being increasingly unwilling to voluntarily change job. \u201cThis likely reflects risk-adverse behaviour due to fears around a cooling job market,\u201d the analysts said.<\/p>\n

\u201cCompared with the historical average since mid-2019, consumers feel more at risk of being made unemployed and are generally more pessimistic around their future job security, although these last two components have not seen a year-on-year deterioration,\u201d Deutsche Bank said.<\/p>\n

Inflation is also likely to fade next year, when Deutsche Bank expects a \u201csequential improvement\u201d but it said the leisure industry could benefit more from any rise in discretionary spending as in the past year spending on leisure pursuits such as holidays, music festivals and sport has outperformed retail spending by about six percentage points.<\/p>\n

Deutsche Bank downgraded its ratings on AB Foods and Wickes to sell, from hold, and cut Kingfisher to hold, having previously recommended buying its shares.<\/p>\n","protected":false},"excerpt":{"rendered":"Fears that UK consumers will rein in spending in the second half of this year has knocked the…\n","protected":false},"author":2,"featured_media":375522,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,16,15],"class_list":{"0":"post-375521","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115096321024376113","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/375521","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=375521"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/375521\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/375522"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=375521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=375521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=375521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}