(Bloomberg) -- Signs of pain on the U.K. high street grew in the first quarter, according to a report by the Bank of England's network of agents.
Weak consumer spending means there is now “some evidence of financial distress in retail and leisure,” the central bank warned on Wednesday, citing a summary by its agents around the country. Separately, the Confederation of British Industry said retail sales fell in March for the first time in five months, partly due to unusually cold weather and the “Beast from the East” storm.
Britain's consumer sector has taken a battering since the Brexit vote, with the pound's decline in 2016 sending inflation to more than 3 percent at one point. With wage growth not keeping up, that ate into household spending power.
Compounding the problem, the BOE said that some stores are “at risk of failure” due to increasing online sales. There've been weak sales updates from many firms, and both Toys “R” Us Inc.'s U.K. arm and electronics retailer Maplin collapsed in February.
Suit seller Moss Bros Group Plc said on Tuesday it's planning for an “extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds.”
According to the BOE, the first-quarter sales slowdown may also be linked to the subdued housing market and shoppers making large purchases during Black Friday promotions in November rather than the U.K.'s traditional January discounting period. At the more positive end of the spectrum, both budget and luxury brands have seen better figures, and spending on holiday flights and cruises remain buoyant, the BOE said.
--With assistance from Mark Evans
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien, Zoe Schneeweiss
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