Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

High street faces 'difficult decade' warns thinktank

Retailers face a decade of challenging trading conditions, with consumer spending below pre-recessionary peaks for at least another two years and modest longer-term growth over the next decade, according to the latest Ernst & Young Item Club report.

The report forecasted a “difficult decade” as depressed wage growth and rising inflation limit consumer spending growth to just 0.6% this year, 1.3% in 2012 and 2.2% in 2013.

However, the Item Club warned that growth over the decade to 2020 is expected to average just 2% a year, down from the 3.3% rate in the decade before the recession.

It also warned that possible interest rate rises and lack of credit availability could constrain consumer spending even further.

Andrew Goodwin, Ernst & Young Item Club’s senior economic advisor, said: “The squeeze on household budgets is only going to intensify this year, as the gap between high inflation and subdued wage growth continues to widen and we experience a second consecutive year of declining disposable incomes. It will be 2013 before consumers are really able to start to enjoying the recovery.”

The warning echoes recent comments by a number of retailers, including former Asda boss Andy Bond, that the retail recession is only just beginning as consumers start to feel the impact of tax changes and VAT rises on their disposable income.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.