UK Economy Facing Continued Challenges Despite Seeing Positive Results For June
Today’s article focuses on recent economic activity in the UK, focusing on June and July performance alongside the habits of consumers. As a fashion photography studio in London, we often reflect on fashion, retail and the broader economy because it helps inform us about potential trends or changes that could impact the service we offer.
So let’s start with some slightly more positive news on the UK GDP performance in June.
A better June than many expected
June 2023 saw an unexpected rise in GDP, at 0.5% which is a higher figure than many economists forecasted. Whilst only 0.3% higher than forecasts, in terms of GDP this is at least, an improvement.
However, despite it being rare to have some positive results in the economy, experts tell us that it is important to stay calm. This kind of performance is likely to reinforce the Bank of England’s view that interest rate rises are working, according to a partner at Mazar’s auditing firm.
Others point to this June increase as being evidence of how fragile the economy currently is, with expectations that quarter three of 2023 is going to see a weaker GDP performance. With the expectation of further interest rate rises, UK fashion and retail businesses could face further financing challenges and reduced customer demands.
Consumers plan to cut back despite growth in consumer card spend
The latest consumer card spending report is out from Barclays and it saw a 4% increase in July. This is less than an inflation figure of 7.3% and the 5.4% growth seen in the previous month. When we combine it with 60% of people claiming they are cutting back on discretionary items in order to manage rising bills it is not a great sign for retailers and fashion brands across the UK.
Even when we consider the back-to-school period, a traditionally busy time for retailers the expectation is fewer parents will buy brand-new clothes this year. Combined with unseasonably wet weather in July, that saw consumers focus on indoor experiences such as streaming or takeaways, it is more bad news for those of us working in fashion photography studios.
July weather hasn’t helped fashion and retail
As we briefly touched on above, the weather in July wasn’t a great experience for any of us but in particular retail and fashion brands. With long periods of wet weather throughout July of this year, the Retail Sales Monitor by BRC-KPMG highlighted some particularly depressing results.
The total retail sales for July in the UK increased by 1.5% masking a drop in sales volumes, due to the inflation levels we are currently seeing. Some other stand-out statistics include like-for-like retail sales increasing well below the three-month and 12-month averages.
Experts commented that whilst consumer confidence can be seen to be improving, it certainly remains low when compared to long-term viewpoints. Combined with wet weather and increasing interest rates, the challenges are set to continue for fashion brands, retail stores and fashion photography studios.
