Britain's Consumption Chill? Record Unemployment Amidst Retail Slowdown
- TBA
- 22 minutes ago
- 4 min read
Recently, the UK's economic data has sounded the alarm once more.
According to the latest figures released by the British Retail Consortium (BRC) and KPMG, UK retail sales grew by only 1.6% in October 2025.
This figure is not only lower than September's 2.3% but also marks the slowest growth since May, with consumer momentum clearly weakening and the high street seemingly entering an 'economic winter' early.
Retail growth stalls across the board: food and non-food sectors both suffer
Analysis indicates that this slowdown in growth is comprehensive, not just limited to specific categories:
Food sales growth narrowed sharply by 0.8 percentage points to 3.5%.
Helen Dickinson, CEO of the BRC, stated pointedly that this growth is primarily driven by price rises rather than an increase in volumes. This means people are actually buying less, but the amount spent appears higher due to inflation.
Non-food sales have almost stagnated, increasing by only a marginal 0.1% year-on-year.
Categories such as footwear, stationery, and electrical goods saw noticeable drops in sales. The mild autumn weather led to a backlog of seasonal items with everyone holding their breath, waiting for the 'Black Friday' discount frenzy on 28 November.
Consumers' caution is not unfounded. Data from Barclays paints a more worrying picture: a third of consumers postponed major purchases last month, and two-fifths adjusted their financial arrangements due to anticipated budget changes.
Crucially, there is a crisis of confidence.
The seven consumer and economic confidence indicators tracked by Barclays have all fallen for the first time since August 2022:
The proportion confident in their household finances plummeted from 74% to 63%.
The proportion confident in their own job security dropped to 44%, the lowest point since 2023.
The proportion who feel they can afford to spend on non-essential items also fell to 51%.
Barclays stated that spending through its credit and debit cards fell by 0.8% in October, with the largest drops seen in supermarkets, department stores, and discount shops. This directly reflects consumers' hesitation at the till.
Unemployment rises to 5%: The job market sounds the alarm
Simultaneously, the labour market is issuing a sharp warning.
According to the Office for National Statistics (ONS), the unemployment rate rose to 5.0% in the three months to the end of September. This is higher than the previous quarter's 4.8% and exceeds market expectations of 4.9%, marking the highest rate in four years.
Behind the cold statistics lies a real redundancy wave.
Reports from HM Revenue & Customs (HMRC) show that the number of workers on company payrolls is falling, having decreased by 180,000 over the past year.
The biggest losses in employment were in the wholesale and retail, accommodation and food service, and IT sectors – precisely the industries that usually absorb the largest number of workers.
A case study – if you run a retail business in the UK and face business pressure, what tax relief can you claim?
In an economic downturn, the retail sector is often hit hardest.
If you operate a supermarket or other retail business in the UK and face a cash flow crisis or even bankruptcy risk, you should be aware of the following potential tax reliefs and mitigation measures:
1. Business Rates Relief
Applicable conditions: If the rateable value of the supermarket property is below £12,000, it may be fully exempt from Business Rates; if it is between £12,001 and £15,000, the relief is gradually reduced. Furthermore, temporary relief may be claimed if the property is empty, partially empty, undergoing refurbishment, or affected by severe local disruption (such as flooding, construction, etc.).
How to apply: Submit an application to the local authority, providing supporting evidence for the property and a statement of financial circumstances.
2. R&D Tax Relief (Research and Development)
Applicable conditions: If the supermarket has carried out trade-related R&D projects (such as innovative product display technology, supply chain optimisation, etc.), and meets the criteria for Small and Medium-sized Enterprises (SMEs) (fewer than 500 employees, turnover below €100 million, or balance sheet total below €86 million), R&D tax relief can be claimed.
How to apply: Submit the declaration of R&D expenditure via the HMRC (Her Majesty's Revenue and Customs) online system, detailing the content, objectives, and outcomes of the R&D project.
Employee-related assistance
If your business pressures result in job losses, former employees may eligible and apply for Jobseeker's Allowance (JSA). Unemployed staff members who are over 18, capable of working, and actively seeking employment may apply for JSA for up to six months to alleviate financial pressures.
Some advice from TB Accountants
Specific assistance policies may vary slightly by region (such as England, Scotland, Wales, and Northern Ireland), and tax relief is not automatically granted.
The key to a successful application is early planning, maintaining transparent communication with HMRC, and providing comprehensive financial evidence to demonstrate the difficult circumstances faced by your business.
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For individuals and businesses looking for UK taxation services, use our contact form to get in touch for more information.
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