A looming recession threatens the UK as businesses grapple with a decline in employment rates, waning business optimism, and reduced output, cautioned a recent report by advisory group BDO. The study revealed that in September, business confidence, output, and hiring intentions continued to plummet due to the enduring challenges posed by “ongoing inflationary headwinds.”
Firms struggled to maintain staffing levels while coping with heightened borrowing costs, wage inflation, and weakened customer demand, according to the report. The situation was exacerbated by the retail sector’s dismal performance.
BDO’s findings indicated that September marked the 14th consecutive month in which sales growth in retail fell below inflation levels. Total like-for-like sales growth in the retail sector was a mere 0.2 per cent, with the fashion segment experiencing a significant decline of -3.4 per cent.
Kaley Crossthwaite of BDO expressed apprehension about the deteriorating economic activity, stating, “An even more pessimistic outlook from businesses, declining output, and the lowest reading on our Employment Index in nine years are mounting indicators of the slowdown predicted over the winter months. With the threat of recession on the horizon, businesses are understandably feeling the pressure.”
Sophie Michael, head of Retail and Wholesale at BDO LLP, highlighted the alarming contrast against September 2022’s weak economic backdrop. She emphasised the concerning trend of minimal sales growth in a high-inflation environment, particularly in discretionary goods sectors like fashion and homewares. Michael stressed that the poor performance against such a feeble base raised significant concerns for retailers, underscoring the urgent need for support during the challenging months ahead.
