Hot weather lifts UK spending as fans and sports gear add to sales
Retail sales in the UK recovered in June as hot weather drove spending on electric fans, sports and leisure equipment, but households remained under pressure from high living costs.The snapshot from the British Retail Consortium (BRC) showed total sales grew by 3.1% year on year in June, after a sharp drop in May, as record-breaking temperatures and promotional offers encouraged consumers to spend.Official figures showed UK retail sales collapsed by 2.7% in May, the sharpest monthly decline in almost two years, in a “dismal” month for supermarkets as the economy unexpectedly shrank by 0.
1%.However, the BRC said June’s high temperatures helped to “heat up” consumer spending.The total value of food sales rose by 4.1% year on year, although this partly reflected fast-rising food prices pushing up the cost of a supermarket shopping basket.Helen Dickinson, the chief executive of the BRC, said: “The soaring temperatures increased sales of electric fans while sports and leisure equipment was boosted by the weather and the start of Wimbledon.
“Food sales remained strong, though this was in part driven by food inflation, which has risen steadily over the course of the year,”Households have come under pressure from lingering high inflation, adding to already elevated living costs, after tax rises and increases in bills,Consumer confidence has also been hit by uncertainty over sluggish growth, a cooling UK jobs market and Donald Trump’s trade wars,Separate figures from Barclays showed consumer card spending – which takes into account broader spending on hospitality and leisure alongside retail – fell 0,1% year on year in June.
Highlighting evidence of consumer caution, it said essential spending – including food and fuel – fell 2.1%.However, the bank, which processes almost 40% of UK credit and debit card transactions, said there were signs of rising consumer confidence and willingness to spend on experiences.The onset of summer festivals, weddings and sporting events contributed to a marginal 0.8% increase in non-essential spending, led by the strong performance of entertainment and health and beauty.
Hospitality and leisure spending grew 2.1%, helped by live shows from Beyoncé and Pitbull, and huge outdoor concerts in Hyde Park.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionSpending on furniture rose sharply, reflecting new homeowners furnishing their properties after a rush to complete purchases before the expiry of a temporary cut in stamp duty in England and Northern Ireland at the end of March.A survey of 2,000 adults by Barclays showed confidence in household finances improved by six percentage points to 73% – a four-month high.Jack Meaning, the chief UK economist at Barclays, said: “The economy has cooled throughout through [the second quarter], but our data does show pockets of strength.
“However, with global and domestic uncertainty, and temporarily heightened inflation likely to continue, consumers are remaining cautious and maintaining savings buffers.“We expect this to lead to limited GDP growth for the remainder of this year, before falling interest rates and a stronger sense of certainty drive a return to growth next year.”
Post Office could hand ownership to staff amid review after Horizon scandal
Ministers are to consider handing over ownership of the Post Office to its operators after the Horizon IT scandal.The Department for Business and Trade (DBT) has published a green paper, starting the first big review of the scandal-plagued organisation in 15 years. The review, which will run until 6 October, follows the publication last week of the first part of the findings from a two-year public inquiry into the Horizon IT scandal.Ministers said part of the review would include looking at the ownership model of the Post Office, which is ultimately controlled by the government, including the possibility of mutualisation or a BBC-style charter model.Ministers have previously met representatives of post office operators to discuss the possibility of handing ownership to the network branch managers who run its 11,665 outlets
Bank of England governor says jobs slowdown could prompt rate cut; European markets fall after Trump tariff threat – as it happened
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.The pound has dropped to a three-week low this morning, after the governor of the Bank of England said it could make larger cuts to interest rates if the jobs market slows quickly.Andrew Bailey told The Times that “slack” was opening up in the UK economy, following the increase to employers’ national insurance contributions. That slack should create downward pressure on inflation.Bailey insisted: “I really do believe the path is downward” for interest rates
English water firm doubles CEO’s pay despite ‘elevated concern’ over finances
A water company serving 3.9 million customers in London and south-east England has doubled the pay of its chief executive despite the regulator saying it had “elevated concern” over its financial situation.Affinity Water said its chief executive, Keith Haslett, received £1.6m for the 2024-25 financial year, up from £709,000 the year before.Bosses’ pay at privately owned water companies has been under intense scrutiny in recent years as the public and politicians expressed increasing anger over leaking infrastructure and sewage spills into rivers
Pound drops after Bank of England says it could cut interest rates more if jobs market slows
The pound dropped to a three-week low after the governor of the Bank of England said it could make bigger cuts to interest rates if the job market slows too quickly.Andrew Bailey said “slack” was opening up in the UK economy, as higher taxes have squeezed employers.He told the Times: “I really do believe the path is downward” for interest rates. The bank rate stands at 4.25%, after four quarter-point cuts in the last year, and the Bank is next scheduled to make another decision on 7 August
Thames Water announces hosepipe ban as dry weather depletes reservoirs
Thames Water has announced a hosepipe ban as a record dry spring and summer has severely reduced water supplies.Households in Gloucestershire, Oxfordshire, Berkshire and Wiltshire will be banned from using hosepipes to wash cars or water gardens from Tuesday 22 July.The ban will affect all OX, GL and SN postcodes, as well as RG4, RG8 and RG9.The recent hot weather has caused a large surge in demand as people water their gardens and keep cool in the heatwave.Nevil Muncaster, strategic water resources director at Thames Water, said he did not “anticipate the situation will improve any time soon”, adding: “We have to take action now
Tax pubs on profit not turnover, urges Greene King boss
The boss of the pub chain Greene King has called for changes to business rates to remedy “unfairness” that he said added to financial pressures on the struggling pubs industry.Nick Mackenzie, Greene King’s chief executive, said the business rates system of property taxes should be changed to a tax on profits.The British pub industry has complained that it is under pressure from a series of increasing costs. The trade body the British Beer and Pub Association (BBPA) said last week it expected pub closures at a rate of more than one a day during 2025, adding to the 350 net closures during 2024. It said business rates were a factor in those closures
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