Market News

BY James Warrington

British shoppers are expected to stay away from the Boxing Day sales as Rachel Reeves’s tax raid hits consumer confidence.

Spending during the festive sales period is forecast to drop by £1bn to £3.6bn this year, according to Barclays.

The decline is driven by falling appetite among shoppers, with only 26pc planning to take part in the Boxing Day sales, down from 28pc in 2024.

Those who will take part intend to spend more, with average outlay forecast at £253 per person, up by £17 compared with a year ago.

However, the lower overall expenditure forecast will deal a fresh blow to already struggling high street retailers, who rely heavily on sales during the so-called “golden quarter” to boost their revenues.

Households face continued strain on their budgets, with almost 70pc of consumers blaming lower spending on cost pressures. That is up from less than half a year ago.

Barclays’ survey found that a quarter of Boxing Day shoppers will only buy items they consider to be essential.

Ms Reeves announced a fresh tax raid in last month’s Budget through a freeze on income tax thresholds that will drag millions into paying more, as well as higher taxes on property and savings.

Consumer confidence fell to -19 just ahead of the Budget, according to GfK’s long-running survey.

‘Less competition from fewer sales shoppers’

Separate data from Barclays showed that households cut back spending at the fastest pace since the pandemic last month, despite heavy discounting during the Black Friday sales period.

Karen Johnson, head of retail at Barclays, said: “Shoppers have demonstrated just how cost-conscious they are throughout 2025, and we expect that we’ll see this play out during the Boxing Day sales.

“Those that do hit the high street might benefit both from bigger budgets, perhaps having held out for the sales, and potentially less competition from fewer sales shoppers.

“Boxing Day is still a pivotal moment for retailers, fuelled by Christmas nostalgia, but it has evolved to reflect modern consumer demands.”

Shops have also been hit by the Chancellor’s recent Budgets. In particular, increases in the minimum wage and a rise in employers’ National Insurance contributions have disproportionality affected the sector, which relies heavily on lower-paid workers.

Labour’s upcoming Employment Rights Bill, which will crack down on zero hours contracts, will further increase red tape and hamper the sector’s ability to offer flexible and part-time jobs.

The latest figures from the Office for National Statistics show there were 2.8 million UK retail jobs in September, down by 74,000 from the same point last year and 355,000 fewer than in 2015.