Retailers up and down the UK expected to struggle with their worst month since May as the country kicked off 2021 with another set of lockdowns.
The Confederation of British Industry found that retail sales fell in the year to January, after having gone through December broadly stable.
In a survey of 133 firms, which includes 66 retailers, the CBI found they had been seriously hurt by Covid-19 restrictions.
“Today’s data brings home the ongoing challenges of lockdown for the retail sector, as sales volumes weaken once again,” said CBI principal economist Ben Jones.
“On the upside, while the headline balance points to a fall in sales across many sub-sectors, the experience of the past few months suggests the decline won’t be anything like as severe as in spring 2020.”
The UK had been placed into a countrywide lockdown again by January 5, more than nine months after the first lockdown was imposed in England.
It meant that all non-essential shops were forced to close and will stay closed until the restrictions are lifted.
“With the lockdown likely to remain in place in the near-term, retailers expect this weakness to continue. It is therefore vital that Government support continues in parallel to restrictions,” Mr Jones said.
“To alleviate some of the stress on our struggling high streets, the business rates holiday should be extended for at least another three months to those businesses forced to close. In the longer-term there must be a fundamental review of business rates. A reformed system can play a key role in driving essential investment across the UK.”
The CBI’s survey was carried out between December 22 and January 14. It found that 74% of businesses expected sales to drop in the coming month compared to a year earlier.
Meanwhile, only 23% thought sales volume would rise. Among wholesalers, 58% expected a drop and 24% were forecasting a rise in sales volumes.
The UK’s businesses have faced a tough year, with many retailers being forced to close. During the pandemic high street names such as Debenhams and Topshop-owner Arcadia have been forced into administration.