UK Economy Expects To See Slow Growth And High Inflation
As the title suggests, we’ve not seen the most positive forecasts for the UK economy in 2023 and it is important to delve deeper into how this is reflected in fashion and retail performances to date.
The retail and fashion photography studio industries, like many others, are experiencing significant challenges including increasing costs and consumers facing a cost-of-living crisis. If the analysis is correct, the UK economy will see some of the slowest growth of the G7 countries and continued high inflation. Two economic factors that we can agree, don’t provide much in the way of positivity.
So what did the first quarter look like?
As we are halfway through 2023, it is a good moment to reflect on Q1 results for the UK. As a fashion photography studio in London, we must be aware of the wider economy and how it can impact not only our business but our clients and the industries we operate in.
The UK saw an increase in GDP by 0.1% in Q1 of 2023, compared to Q4 of 2022 (ONS Data). However, March saw a reduction in output and is perhaps an accurate reflection of the challenges industries will face for the rest of the year.
With continuing strike action and inflation, the risk is the rest of the year will look very much like Q1.
The OECD Forecast
If we look at the data itself, the Organisation for Economic Co-operation and Development (OECD) forecasted an average level of inflation for the UK of 6.9% in 2023. Experts state that this figure is higher than many other countries expect to experience and is a result of higher labour costs as well as the impact of worldwide energy costs.
Moving further into the future, the OECD does forecast a faster fall in inflation in 2024, where it will get closer to government targets. However, if we look at growth then 2023 may grow by 0.3% and 2024 by 1%. This isn’t a glowing report when compared to other major economies. In fact, only Germany is expected to perform worse than the UK.
Bank holidays fail to boost the struggling retail industry
Switching now to the retail industry, there was a degree of hope and expectation that the bumper group of bank holidays in May would get shoppers back on the high street. However, that doesn’t appear to be the case.
The data shows that sales growth was at its lowest in the past six months. The UK retail sales for May grew by 3.9% but that is below the three-month average. Online retailers faced similar challenges, with the ongoing cost-of-living crisis impacting consumers’ desire to spend money.
It is not all bad news though and if we search hard enough as a fashion photography studio for some positive news then the warm weather is helping. There has been an increase in summer fashion and gardening sales. Hopefully, with more warm weather to come this trend will continue and be a welcome boost for fashion retailers everywhere.
