For the first time in years, the month of June saw one of the worst down turns in UK retail sales. Credico UK reports how the uncertainty of the country’s future played a pivotal role in this decline.
The UK retail sector saw sales fall in the run up to the EU referendum that took place back on 23rd June. UK investors were also cautious in the build-up to the referendum as Investment Association (IA) interim chief executive Guy Sears claimed that fixed income funds were the most popular amongst UK investors in May, as they looked to lower their risk exposure ahead of the vote.
The Confederation of British Industry says retailers are reporting that sales dropped to 4% from 7%. The survey was conducted between 26 May and 14 June – before the UK’s shock vote to leave the European Union (The Guardian, 2016). The UK will grow by 1.9% this year, compared with its earlier prediction of 2.3% pre-referendum.
Credico UK believe that long-term outlook for the UK depends on which actions new Prime Minister Theresa May takes to keep growth on track. May wanted to remain in the EU but will respect the referendum result, claiming ‘Brexit means Brexit’ last week. Howard Archer, chief European and UK economist at IHS Global Insight said, “Following the vote to leave the EU, the strong suspicion is that consumer spending will be severely pressurised for some time as a consequence of increased uncertainty, likely higher unemployment and squeezed purchasing power. It is probable that purchasing power will be squeezed by inflation being pushed up markedly by a sharp fall in sterling.” (The Guardian, 2016).
It will be difficult to determine how the retail industry will recover and although the pound has devalued since the vote, UK assets have become cheaper for foreign investors; Credico UK believes this should help with cash flow. While initial focus has been on the UK, Credico UK agrees that the impact of the referendum could spread across the world. Indeed, there have been predictions that the European Central Bank would have to cut interest rates in the Eurozone further into negative territory.
Luckily, Credico UK operates on a business model that can thrive in any economic climate and the firm is pleased to confirm that they are not among the worst affected by the referendum decision. Credico UK specialise in customer acquisition and retention services – working with clients to help them increase customer loyalty through face-to-face interactions. With the help of an experienced and friendly sales force, Credico UK builds personal connections between clients and consumers by taking the time to learn about each consumer’s unique set of needs and requirements.