Retail sales fall as Black Friday deals fail to lure shoppers

Official figures show that retail sales fell unexpectedly in November as Black Friday discounts failed to boost spending.

According to the Office for National Statistics (ONS), sales volumes dropped by 0.1% last month, confounding analysts' predictions of a 0.4% rise. Supermarket sales fell for the fourth consecutive month, while non-food stores saw a weaker uplift from Black Friday promotions than in recent years.

However, a separate survey published on Friday suggests that consumers may be ready to spend in the final run-up to Christmas, with consumer confidence in December matching a 16-month high.

Confidence on the Rise

The GfK Consumer Confidence Index revealed that households are feeling more optimistic about their finances for the year ahead, although the overall mood remains subdued.

Oliver Vernon-Harcourt, head of retail at Deloitte, suggested that the Bank of England's decision to cut interest rates to 3.75% on Thursday may have bolstered sentiment.

"Retailers will hope this will lead to a rise in consumer demand during the critical pre-Christmas trading period," he said.

However, the Bank of England noted that businesses reported consumers remained "keenly focused" on value for money. Companies responding to the Bank's survey regularly cited the recent Budget as a factor dampening spending in recent months.

Danni Hewson, head of financial analysis at AJ Bell, said that "unnerving customers at the peak of the holiday buying season" was to blame for the slowdown.

"Despite Black Friday temptations, shoppers were affected by all the rumours about potential tax hikes and continued to display an abundance of caution," she said.

Mark Neale, managing director of outdoor retailer Mountain Warehouse, told the BBC's Today programme that the Budget forecast had been "unhelpful" to the company, despite it recording a record sales period.

According to the ONS survey, 31% of adults said they intended to take advantage of Black Friday deals, but 19% planned to buy less than they did last year.

Public Borrowing Higher Than Forecast

Separately, the ONS reported on Friday that UK government borrowing was higher than anticipated last month.

Public sector net borrowing stood at £11.7bn in November, above the £10bn expected by analysts. However, the figure was £1.9bn lower than in the same month last year and marked the lowest November borrowing figure for four years. The ONS attributed the decline primarily to increased tax receipts and National Insurance contributions.

Government borrowing for the financial year to November has now hit £132.3bn, significantly ahead of where it was at the same stage last year. This increase is partly driven by the decision to increase public sector pay and inflation-linked benefits, despite savings from limiting winter fuel payments.

James Murray, Chief Secretary to the Treasury, insisted the Budget would "deliver on our pledge to reduce debt and borrowing."

"One out of every £10 we spend goes on debt interest," he said. "That is money that could otherwise be invested in public services."

However, the Opposition accused the government of "piling up ever more debt."

Shadow Chancellor Mel Stride said: "Labour is borrowing more to fund irresponsible spending after scrapping the two-child benefit cap and abandoning welfare reform."

Matt Swannell, chief economic advisor to the EY ITEM Club, noted that if the government is to meet the Office for Budget Responsibility's target of £138.3bn for the current financial year, it would need to "deliver a significant decrease in borrowing over the next few months."